Amy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Written By Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Personal Finance Expert Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
| Lead Editor, Insurance
Updated: Sep 28, 2023, 4:41am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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Do you need personal property coverage? If you own more stuff than you can afford to replace, then the answer is yes. Whether you’re a renter, a condo owner, a mobile homeowner, or a single-family homeowner, purchasing the best home insurance policy can help you repurchase your belongings after a loss covered by your policy (such as a fire).
Personal property coverage is a standard part of a homeowners insurance, condo insurance or renters insurance policy that covers the contents of your home if they are damaged, destroyed or stolen.
We recommend having “replacement cost” coverage for your personal property. This coverage reimburses you for new, similar items. If you have only “actual cash value” coverage your reimbursement will be based on the depreciated value of your belongings. You’ll have to pony up the difference if you want to buy new items.
Your clothes, furniture, books, dishes, appliances and everything else in your house or apartment are generally considered “personal property,” but there are some exceptions that we’ll discuss below.
A standard home insurance, renters insurance or condo insurance policy will cover damage or loss of your personal property if it was caused by a “named peril.” These perils include the problems you’d expect, like fire and theft.
For example, here are the problems covered by a standard home insurance policy (also called an HO-3):
If you’re looking for more coverage, an “open-peril” policy, also often called an HO-5 home insurance policy, has broader protection for personal property. With an open-peril policy, anything that’s not specifically listed as an exclusion is covered. Not all insurance companies offer this type of policy.
Personal property coverage will pay to repair or replace your belongings as long as the loss occurred because of a problem covered by the policy.
For example, if high winds blow a tree over, the tree smashes through your roof and rain soaks everything in that room, personal property coverage would pay to repair or replace your damaged items.
Or, if burglars smash your sliding glass door and walk out with your 65-inch 4K OLED TV, your personal property coverage will cover the cost to buy a new television.
The limit of your personal property coverage will usually be somewhere in the range of 50% to 70% of your dwelling limit. In other words, if you have $300,000 in coverage to rebuild your home, you might have $150,000 to $210,000 in personal property coverage. If you want more personal property coverage, you can typically buy more.
Personal property coverage also includes protection for your belongings when you’re away from home—anywhere in the world, in fact. Your policy may have a much lower coverage limit for problems that occur while you are away from home, such as 10% of your usual personal property coverage.
Your policy may also cover a guest or household employee’s personal property while they’re at your home, provided you are living there at the time.
Personal property coverage doesn’t protect your stuff against problems your homeowners, condo or renters policy doesn’t cover, such as an earthquake or floods.
For example, if an earthquake or flood damages your belongings, the personal property coverage from your homeowners policy won’t reimburse you. If you want coverage for those natural disasters, look into earthquake insurance and flood insurance.
Personal property insurance also doesn’t cover every type of property you may own. It may completely exclude coverage for certain things, like pets, vehicles and aircraft.
In addition, if you rent out part of your home, your homeowners insurance policy won’t cover the tenant’s personal property. They’ll need to purchase a renters insurance policy to cover their belongings.
And if you rent out your personal property, your homeowners insurance won’t cover those items.
Personal property coverage also doesn’t protect your belongings from theft at a home that’s under construction. There are additional risks associated with keeping your stuff in a structure that’s not fully built and that you don’t occupy.
Some of your personal property may not be excluded from coverage but will have sub-limits for reimbursement. Here are some sub-limits found in a standard home insurance policy:
For valuable items, you should consider scheduling your personal property.
Scheduled personal property is an optional coverage to a home, condo or renters insurance policy that provides more coverage for high-value items, like jewelry or artwork. It is also called an endorsement, floater or rider.
For example, if you don’t schedule your $10,000 watch and it is stolen, your insurer will only reimburse you up to the sub-limits on your policy, which may only be $1,500.
You want enough personal property coverage to compensate you in the event of a total disaster. If a tornado completely destroyed your house, what’s the value of all the stuff you’d lose, excluding the structure? If you had to buy everything again, down to new plates and socks, how much would that cost? These are the questions to ask yourself when evaluating coverage options from insurers.
A standard home insurance policy usually sets the personal property coverage to 50% of your dwelling coverage amount. So if your dwelling coverage is $300,000, you likely have $150,000 for personal property. You can increase that coverage if needed. Conducting a home inventory to determine the value of your belongings can help.
When buying a homeowners, condo or renters insurance policy, you can typically choose between actual cash value vs. replacement cost coverage of your personal property. Which type of coverage you select determines how much you will be reimbursed for a loss.
An actual cash value (ACV) policy pays for your damaged item, minus depreciation.
For example, let’s say your leather couch is destroyed in a fire. If you purchased a leather couch 10 years ago for $2,000 and the depreciated value is $1,000, then ACV would only pay $1,000 (minus your deductible).
Replacement cost coverage is generally a better option compared to actual cash value. It will reimburse you for the cost to buy new items similar to those you lost.
If your leather couch is destroyed in a fire, you will be reimbursed for the amount it will cost you to replace it with a new, similar leather couch.
Personal property coverage will reimburse you for losses that exceed your insurance deductible. Let’s say your entire home burns to the ground and you lose $150,000 in personal property. If your deductible is $1,000, you’ll get $149,000 to replace your personal belongings.
Your insurance will pay until you reach the personal property limit in your policy.
After a loss, you’ll need to take specific steps, such as:
Ideally, you will have created a home inventory at some point before your problem. Using photos or videos, capture everything in your home. Open drawers, cabinets and closets. Go up in the attic, into the garage and into the basement. Document everything.
Then redocument it annually. It’s a good idea back up your home inventory to the cloud so it can’t be destroyed along with your home.
Personal property coverage is automatically included with most types of homeowners insurance, including HO-3 and HO-5 policies, as well as renters insurance (HO-4) and condo owners insurance (HO-6) policies. It’s not itemized as a separate cost that you can accept or decline.
You will pay more if you choose replacement cost coverage because you will receive more in a claim than if you had actual cash value coverage.
The best way to save on homeowners, condo, or renters insurance is to compare home insurance quotes from several insurance companies. Remember that you’re not just looking for the best price—you’re looking for the best value.
For example, if you’re a homeowner, a good way to get started is by determining how much homeowners insurance you need, which includes your personal property. Then you can begin to compare quotes to find a policy that fits your coverage needs at a reasonable price.
Besides shopping around, you can also reduce your premiums by going with a higher deductible. That’s because your insurer will pay out less if you file an insurance claim. Just keep in mind that your deductible is subtracted from your insurance check, so if you go with a higher deductible, you’ll get less money if you end up filing a claim.
You can also ask about any homeowners insurance discounts you may be eligible for, such as a home security discount.
We don’t recommend cutting corners on coverage to save money. For example, if you decide not to schedule high-value items or you choose actual cash value over replacement cost coverage, you could find yourself woefully underinsured.
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