Personal property insurance is one of the most important parts of a homeowner's insurance policy. It covers all the personal items, which aren't permanently attached to the structure itself. This includes items such as clothing, furniture and other household appliances, including washing machines, TV sets, clothes dryers and refrigerators.
Personal property insurance policy provides coverage for losses:
List of personal property losses
- Fire
- Smoke
- Earthquake
- Lightning
- Vandalism
- Theft
- Property Loss
Personal Property Replacement Cost Coverage vs. Actual Cash Value:
When buying a personal property insurance coverage in homeowner's insurance policy, you'll need to make a choice between replacement cost coverage and actual cash value. Replacement cost coverage will cover all your items and pay for what it would cost to buy them brand new. On the other hand, actual cash value will pay for your items based on the cost of a comparable used item or the depreciated value of that item. Now, suppose a television set that you purchased three years ago for $1,500 gets damaged. In such a case, replacement cost coverage will pay you $1,500 whereas actual cash value policy may reimburse you with its current value price, which can be assumed to be around $650.
Maximum Coverage Amounts For Personal Property Insurance
Some homeowner's standard insurance policies include personal property coverage, worth a certain specific percentage of the home's insured amount. For instance, if your home is insured for $200,000 then your personal property coverage may be 50% of $200,000 that is $100,000. You can lower your insurance premium by opting for a low coverage amount. However, it's recommended that you don't lower your coverage amount drastically. It is a wise idea to base your coverage limit on the cost (based on the current prices) required to replace your property. Also, since replacement properties change, you may be required to renew your insurance coverage limits regularly at specific intervals, as you mount up more property, or your household prices depreciate.
Some Personal Property Exclusions
When choosing a personal property insurance coverage, it's very important for you to be aware of what all types of losses your insurance policy covers. For instance, your personal property coverage may not cover outdated, rare or antique items. In addition, it may not cover your personal property that is in transit or storage.