When I was in high school, a Colorado wildfire threatened to destroy our home.
My parents sent me and my siblings to our rooms to grab whatever belongings we wanted to protect, explaining that the stuff we left behind could be lost forever. I remember standing in the doorway, scanning books, CDs, stuffed animals, family heirlooms, art supplies, and more—not knowing where or how to begin.
Insurance can be an overwhelming topic for anyone, but it’s moments like these that make it essential. When unexpected circumstances occur, insurance can help you maintain your financial stability and, of course, your peace of mind.
Take a look at the information below to learn how personal property insurance can help you protect the value of your belongings.
What is personal property insurance?
Personal property insurance, also known as personal property coverage, is one of six components that make up a typical homeowners insurance policy, as well as renters insurance and even condo insurance. It provides coverage for your insured belongings when certain perils occur, such as theft, fire, or hail.
In other words, it protects the value of your stuff when bad things happen.
What is the difference between personal property insurance and homeowners insurance?
Personal property insurance is to homeowners insurance as pepperoni is to pizza. They’re not two versions of a product; one is a crucial element of the other.
A standard homeowners insurance policy, referred to as an HO-3 policy (HO-3 is the most common among eight types of homeowners insurance policies), includes coverage for a wide variety of belongings and circumstances. It provides dwelling insurance—which covers the cost of an entire rebuild of your home. It offers liability coverage, in case you’re held responsible for an injury someone sustains on your property. In addition, it includes personal property coverage (also referred to as contents coverage or Coverage C), which protects the stuff inside your home.
Where can I get personal property insurance?
Your standard homeowners or renters insurance policy will include personal property coverage, so the question you should be asking now is where to find insurance for your home.
One way to browse and compare insurance companies is through an independent resource like Policygenius. In just a few minutes, Policygenius will use your information to calculate quotes for homeowners insurance policies and renters insurance policies from a number of top companies.
As a bonus, Policygenius customers save an average of $1,127 each year!
Another option for homeowners insurance is Lemonade. With Lemonade, you can get insured in as little as 90 seconds. And if that isn’t good enough, rates start at only $25 a month!
If you have the unfortunate luck of needing to submit a claim, it only takes three minutes to get paid through Lemonade. In times of great need, like a home fire, this quick payout can be extremely important to get you back on your feet. You might even be able to help others do the same, since Lemonade annually donates the money left over, after paying out claims, to charities that their policyholders care about.
Tech-loving homeowners might want to check out Young Alfred, a marketplace that is using technology to save its users time and money. And if you try to avoid talking on the phone at all costs, you will truly enjoy the fact that Young Alfred doesn’t require you to pick up the phone to enroll in an insurance policy.
Young Alfred works with top-rated insurers to help find you the best policy. The best part? It is 100% free to use and the application process is a total breeze.
What does personal property insurance cover?
Personal property insurance is designed to protect the value of numerous possessions, including (but not limited to):
- Trampolines (yup, even trampolines!).
Most policies also include coverage for expensive and rare items, such as family heirlooms, jewelry, and guns. However, there is typically a limit to the amount your insurer will pay—such as $2,500 for furs. If you know you’ll need more coverage for certain valuables, many companies offer an enhanced coverage option, in which case you could increase the limit up to $5,000 or even $25,000.
Or, you could purchase a scheduled property endorsement. With this option, you would list the valuables you want coverage for, along with the appraised value of the item. A scheduled property endorsement also typically allows you to bypass the deductible, so it is certainly worth considering!
Personal property insurance also protects the value of your belongings when they are not physically in your home. If you went on a family vacation, for instance, and someone stole your diamond earrings, you’re likely eligible to receive coverage and should talk to your insurance provider to learn more.
Nevertheless, not all your possessions will be covered under personal property insurance. For instance, cars and certain animals, such as birds, likely won’t be covered.
Which perils does personal property insurance cover?
Personal property insurance covers a number of perils, including:
- Vandalism (although, there are some exceptions).
For instance, if your belongings were damaged in a flood, they most likely won’t be covered under your personal property insurance policy. Instead, consider a separate flood insurance policy to make sure your stuff is protected.
Additionally, damages caused by an electrical failure will likely not be covered under personal property coverage, but could be covered under equipment breakdown coverage.
How much does personal property insurance cost?
Your personal property coverage is generally lumped into your homeowners insurance policy and is often valued as a percentage of your dwelling insurance, usually between 40% and 75%. For example, if your policy provides $450,000 in dwelling coverage, you can expect anywhere from $180,000 to $337,500 in personal property coverage.
Nevertheless, while the amount of personal property coverage may fluctuate based on the value of your home and the insurance company you select, policies typically average around $1,200 annually. The final sticker price for your policy will increase, however, if you opt for special options like a scheduled property endorsement (about $25 per $1,000 in coverage annually).
How do I choose the amount of coverage I need?
If your entire home were to disappear in a fire or hurricane, your personal property insurance should be able to reimburse you for everything inside. Consequently, the easiest way to make sure you’re getting adequate coverage is to determine the estimated value of your possessions.
Start by walking through your home. Take pictures or a video. Make notes about any specific valuables, antiques, and heirlooms you want to be covered. Then, add it all up! Try and choose whole numbers and round up the final tally when you’ve finished.
By default, most policies offer what’s called actual cash value (ACV), which means you’ll be reimbursed for the depreciated value of your belongings. However, you can also add replacement cost value (RCV) to your policy. To understand ACV versus RCV, consider the difference between what you’d sell your 5-year-old couch for today and what you’d pay to buy a new one. The former would be ACV, and the latter, RCV. With RCV, your insurance company will first provide the ACV of your possession, and then they’ll reimburse you for the remaining cost, once you’ve replaced the item.