Whether you own or rent your home, the value of your property can quickly increase. What happens if the contents of your home, such as furniture, electronics, and clothing, are damaged or stolen?
The good news is that tenants, landlords, and condo insurance generally cover the contents of your home. This coverage is sometimes also called content insurance but is generally referred to as personal property coverage in most insurance policies.
Content insurance allows you to pay to replace or repair your personal effects if they are stolen or damaged by a covered danger such as a fire. If someone breaks into your home and steals your laptop, or if your clothes and furniture are ruined by fire, content insurance can help cover the loss.
It is important to understand what type of coverage you have and how much your policy can pay for a covered claim so that you are better prepared if you ever need to make a claim. Read on to find out how content assurance works, coverage limits and some things to consider.
REAL ESTATE COVERAGE: REAL TREASURY VS. REPLACEMENT FEES
In general, when you purchase a home, tenant, or co-ownership insurance, your insurer can choose between two types of personal property coverage to protect the contents of your home: the actual cash value and the replacement cost. By covering replacement costs, you can reimburse the cost of replacing an item damaged by a similar type and quality.
Coverage of actual present value generally pays you the current value of the content you insure, but takes into account the depreciation of the item, according to the Insurance Information Institute (III).
Here is an example of how these two covers work. Suppose you file an insurance claim after the theft of your five-year-old TV. True value content insurance only covers a percentage of what you paid for. In the meantime, a policy with replacement cost coverage may provide sufficient coverage to allow you to purchase a replacement of the same quality at its current value.
Please note that your insurance premium may increase if you choose to cover replacement costs.
Create an inventory
So how do you know which cover and which type is right for you? One way is to take inventory of your belongings. In addition to listing or photographing your personal belongings, also provide details such as electronic product serial numbers, brands and models, and the year of purchase. It is also a good idea to include official documents such as receipts and reports with your residential inventory. By documenting what you own, from electronics to shoes, you can get a clearer picture of what you own and its value. This can help you decide the amount of protection you need and can also be helpful if you need to make an insurance claim.
CONTENT LIMITS OF INSURANCE INSURANCE
Whether you can also choose replacement cost coverage or actual value coverage, you have a coverage limit and a deductible. A limit is a maximum amount your policy pays for a covered claim. A deductible is an amount you pay out of your pocket before your insurer helps you pay for a covered claim. You may be able to choose your coverage limit based on the value of your personal belongings.
However, coverage restrictions may apply to certain valuable items. Standard content insurance generally limits coverage of certain types of valuable items, such as jewelry and furs, says III. Suppose your diamond ring is stolen. Although the coverage of your personal property may be greater than the value of the ring, a standard policy may offer more limited coverage. For example, the police can only pay up to $2,500 if a piece of jewelry is stolen.