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Insurance 101: What is Personal Property Coverage?

This resource is provided by ACSA Partner4Purpose California Casualty 

Personal Property, also referred to as “contents coverage,” is the term insurance companies use to collectively define the things you own inside your home. Imagine picking up your house, turning it over, and giving it a good shake.  What would fall out? Furniture, electronics, clothing? The possessions that “make your house a home” are considered your personal property.

Should something insurance-related (like damage or theft from a covered peril) happen to your home, you’d likely have many personal property items to replace. Both homeowners and renters insurance policies typically include Personal Property Coverage, but in order to for your insurance coverage to help replace your items, you need to know how much personal property coverage you really need. That’s when a home inventory comes in handy.

Most people know a good ballpark for the dollar amount/coverage limit they need to cover the exterior of their home, known as Dwelling Coverage, but they rarely know the value of their personal items inside their home. Having the right amount of coverage to replace these personal items will make your life so much easier if/when you have a covered claim.

Plus, most insurers offer optional scheduled personal property coverage, or rider, for more special and/or expensive items such as jewelry, watches, and furs that have values above your personal property coverage limits.

Here are some things to consider when it comes to protecting your belongings:

  • For homeowners policies, personal property coverage is usually a percentage (ranging from 20-50%) of your homeowners’ Coverage A (Dwelling Coverage) on your policy. However, you can purchase more coverage if needed.
  • Renters are able to choose their personal property amount for their policies.
  • There are two types of personal property coverage: replacement cost and actual cash value.
    • An actual cash value policy factors in depreciation (use and age) to provide reimbursement based on the current value of an item, not what it would cost to replace it.
    • A replacement cost value policy typically pays the dollar amount it takes to replace your item following a covered claim. Replacement cost value usually has a slightly higher premium cost than actual cash value, and some insurance companies will give you the option to choose replacement cost value if you’re willing to pay a little more premium.
  • It’s also important to know that personal property coverage usually has certain limits on what it will pay to replace an item or category of items. Be sure that the coverage (or amount of anticipated compensation in the event of a covered claim) you actually need is within these limits or you may want to add coverage to better protect your cherished possessions.
  • There are exclusions to personal property coverage! Items in your home like pets, property of roommates, boarders, or tenants (for homeowner’s policies), and vehicles are not covered.
  • Sometimes if the event that caused the damage (peril) is not “named” on the policy, there is no coverage for that cause of loss.

It’s a good idea to take inventory of your personal property, complete with pictures and the purchase price of each item. As an easy reminder, and to stay on top of all of your new possessions, mark your calendar to do your home inventory every six months- once in the middle of the year and again at the end of the year. In the event of a loss, your up-to-date home inventory will help simplify the process of filing a claim.

A conversation with an insurance advisor will be helpful as you consider your coverage limits. Knowing what you own and understanding how your personal property coverage works can give you more confidence as you navigate through the quoting process and comfort in the event of a loss.

DISCLAIMER: These general industry descriptions are not representative of your individual insurance policy. Please be sure to review your policy at least once yearly with your insurance representative and mention any home improvements to ensure your coverage is complete.

This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.

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