If you have homeowners, renters, or condo insurance, you likely have personal property coverage.
You may not understand exactly what that means, but that’s okay.
As you know, I am a huge fan of talking about insurance in “plain English.”
In this article, we'll explain what personal property insurance covers and what that means in conjunction with your homeowners or renters insurance.
What is Personal Property Coverage?
So, what is personal effects insurance? The personal property section of your insurance policy is also known as contents coverage, contents insurance, or coverage C.
It is the part of your renters or homeowners insurance that covers your personal belongings in case of loss, vandalism, or ruin.
Contents insurance protects you against damage, destruction, or loss in the case of a covered peril.
It will help you recover the cost of your items so that you can repair or replace your belongings up to your policy limit.
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What Does Personal Property Insurance Cover?
The personal property insurance definition is: “the stuff you own,” according to Lemonade Insurance. It is, for all intents and purposes, your home’s contents.
Every insurance policy is slightly different, but typically, the following items are covered by your personal property insurance coverage, up to your policy limits.
What is essential to understand is that your contents insurance only covers your belongings up to your policy limits.
You set these limits when you set up your policy—the higher your limits, the higher your monthly premium.
As an example, say that someone steals your laptop from your car.
Your personal property insurance claim can help you to pay for a new one. In another scenario, say that your friend brought his Dungeons & Dragons books over for a game.
During the evening, lighting strikes and starts a fire. You and your friend are okay, but the fire destroyed his manuals.
They would be covered by your personal property insurance (if not already covered by his) because they were in your home when the damage happened.
If you have high-value items like jewelry or art, your insurance policy may not cover these fully. We’ll discuss this in more depth later in this article.
What Isn’t Considered Personal Property?
Now that you have a good idea of what your personal property insurance covers, let’s look at what it doesn’t cover.
What are Covered Perils?
Your homeowners or renters insurance will only pay out for damage, loss, or destruction that they cover—and sometimes the lines can get a little blurry.
For example, if a burst pipe floods your home, damaging your items, your insurance policy will cover them.
However, if a flood originating outside of your home destroys them, your belongings will not be covered, unless you flood insurance as well.
Most policies cover the following:
If you live in an area known for floods, mudflow, earthquakes, or sinkholes, it is smart to purchase separate policies to protect against these types of natural disasters.
Some mortgage companies require such policies at signing. As always, it is best to look at your policy and understand what your covered perils are.
Coverage for Jewelry and High-Value Items
As mentioned, most insurance policies only cover high-value items like jewelry, art, firearms, investment metal, and others up to a specific limit.
If you own these items, it is wise to get extra coverage on your personal effects policy.
Some companies refer to this as “scheduling personal property” or “endorsements," while others may recommend a separate policy altogether.
It depends on your insurance agency and the value of your high-ticket items.
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How Much Personal Property Coverage Do I need?
Your personal property insurance coverage should be an amount equal to or higher than the value of your belongings.
We recommend that you spend some time going through your home and taking an inventory—make a list, take pictures, or make a video of your belongings.
You don’t have to list every single shoe, but you should know the general cost of replacing your shoes as a whole.
Once you have a final number, round it up to the nearest $10,000.
Some insurance companies have a home inventory worksheet, but you can find templates for Excel or Google Sheets for free online.
Then, you need to consider the type of replacement cost you want in your policy: the actual cash value or the replacement cost value.
Actual Cash Value
Most insurance policies replace your lost or damaged items at their actual cost value. That means they are paying you the depreciated cost of your item.
You’ve likely heard that your car loses value as soon as you drive it off the lot, or that your computer immediately becomes obsolete once you get it home.
That’s what depreciation is—the decrease in the value of your items over time.
Actual cash value is the standard coverage in most policies. You can, however, opt into replacement cost coverage with most insurance companies.
Replacement Cost
If you get replacement cost coverage, you will be paying a slightly higher monthly premium. However, you will lock in the replacement value of your belongings.
Your insurance company will pay you the actual cash value of your items, and then reimburse you any cost difference once you have replaced the item.
Make sure to keep your receipts and documentation if you take this option. You will need them to make a personal property insurance claim.
How Much Does Personal Property Coverage Cost?
As with all insurance policies, the type of insurance, your location, and your coverage limits will determine your costs.
However, we can give you a general estimate.
For personal property home insurance, depending on your location, you can expect to pay anywhere from $700 to $1,700 a year.
For personal property renters insurance, you will pay anywhere from $140 to $300 a year.
Taking Action
Personal Property insurances protects your belongings from loss, damage, or destruction.
It’s easy to see how important it is to have personal property insurance coverage and understand what that coverage entails.
If you want to update your homeowners insurance, we’ve done the hard work for you—check out the top four companies or get your free quote for homeowners insurance or renters insurance today.