INSURANCE GUIDE

Couple in front of their new home
Home Owners Insurance and Property Protection

Many home owners purchase a basic policy to fulfill either legal or mortgage requirements and go about their days believing that they have adequate coverage. Unfortunately, many homeowners don’t find out until it’s too late that they needed far better protection. When it comes to your house, it’s always a good idea to buy replacement value coverage but many homeowners don’t focus closely enough on the personal belongings aspect of a home insurance policy. The basic policy will insure your belongings up to a certain percentage, typically 50-70% but an established household’s contents may be valued at much higher levels. If you experience a catastrophic loss or get hit by a group of professional thieves, make sure your personal belongings are covered. Here are some coverage gaps that homeowners may experience.

Dollar Limits

Whether you’re an avid collector or have just a few heirloom pieces, we all probably have some items in our home that need more coverage. While most property will fall under the main personal property coverage, certain items have individual dollar limits. Once that dollar limit has been exhausted, the insurance company doesn’t owe you anymore benefits regarding that particular claim. Dollar limits normally apply to items like jewelry, silver, guns, coins, stamps, and boats, motors and trailers. The insurance company intentionally sets limits on these items because they tend to be very valuable. If these items were automatically insured at full value, it might be tempting for some homeowners to falsely claim theft. Instead, insurance companies offer more protection at a premium. Dollar limits typically start low, around $1,000 but you have the option to raise your dollar limits. There will be a cap as to how much coverage you can purchase but even the top level is relatively inexpensive. If you have lots of expensive jewelry or a high dollar sail boat, it’s worth the extra premium for the bonus coverage.

Excluded Cause of Loss

If your home is damaged in a fire or you need to replace the roof due to a falling item, you will typically be covered because the circumstances are specifically covered in your policy. But, as with all insurance policies, there are always exclusions and when it comes to personal property, your claim may not be covered if the damage is sustained from an excluded cause of loss. Be sure to always check your policy to see what the broad causes of loss are and check on specific items that have dollar limits. Many times they may contain more specific excluded causes of loss. For example, while your diamond ring may be covered up to $15,000 (because you raised your dollar limit) from theft, if you lose the actual stone because it fell out of its setting, you may not be covered. Check your individual policy to see which causes of loss are covered and which ones are not.

Valuing Unique Property

We’ve all heard of the people who spend their life acquiring everything a certain artist painted or all the original books of a certain author and you better believe that they have insurance on these items. But with particular items of this nature, there comes a unique problem when insuring them. It can be difficult to place a value upon it so therefore it’s hard to determine what the right amount of coverage should be.

How to Protect Yourself

In addition to raising your dollar limits, there are several things that you can do to protect your personal belongings. The first is to buy special perils coverage. This is completely optional but if you have valuable items, it may be well worth the extra premium. This helps cover any excluded loss of value by broadening the coverage to include even the most bizarre forms of loss. For example, if you spill wine onto your fur coat, the basic homeowner policy will not cover this. If you have special perils coverage on that coat, it will cover all cleaning costs. If your entire system of electronics is ruined due to a lightning storm and you must replace everything, you will be covered. Special perils is great for covering the random things that cause damage to your personal belonging but it is still subject to the long list of broad causes of loss. If your home insurance won’t cover floods or earthquakes, special peril coverage won’t either.

Another thing that you can do to protect your personal belongings is to schedule your valuable. This is a tedious process and requires a lot of work from the homeowner but if you have a lot of valuable items, it’s worth the time, effort and money. When you schedule your valuables, you solve all three gap issues. You will insure each item for its proper dollar value and replacement cost if applicable. All causes of loss should be covered and any difficult to value items are appraised. By doing this, you make sure that everything is covered so in the event of a loss, making your claim and receiving benefits is equally as easy. This will cost more but if you can devote the time to scheduling your entire inventory once, the only time you will need to do it again is when you gain more property.

Our homes are important to us but many times, it’s our personal belongings that hold true value. Maybe it’s the picture albums passed down by our families or the first couch that paid for on your own. These items move with us from house to house and many hold memories. Make sure that you protect these items and have the means to make new memories by buying the proper insurance coverage.