It’s sparkling, it’s dazzling, it’s perfect! Imagine you have uncovered the perfect gift that will last a lifetime for that special person in your life. Isn’t that a great feeling? Whether it’s a beautiful necklace for that special someone, a timeless watch, or an instrument for your child, wouldn’t it be nice to know how it is protected if something were to happen to it? Let’s start with the basics.
What’s included on a standard homeowners policy?
Personal Property or Contents Coverage is the portion of your standard homeowners policy that covers the cost of replacing your possessions in the event that they are destroyed by a covered peril (wind, fire, hail, lightening, theft). The standard policy will provide 50 percent – 70 percent of your dwelling coverage limit (Coverage A) towards your Contents Coverage, though you can increase the limits. However, coverage is limited on certain items. Insured personal property is covered anywhere in the world as long as it is owned by you or residents of your household.
Which items need endorsements?
Most standard homeowners policies limit the amount paid for loss to certain classes of property, such as jewelry, furs, and silver. There is minimal coverage for personal property in these classes and a standard policy may limit the perils or cause of loss for which an item is covered. Rule of thumb – if you have an item or a collection that is valued over $2,500, you should mention it to your local insurance agent. The limitations for valuable articles can differ from carrier to carrier and from policy to policy (see sidebar).
Adding valuables to your policy – Two ways:
No matter which way you decide to add your valuable items on your policy, you first should compile a valuables inventory. This will help in identifying items on the policy and help in the settlement of your claim. You should get an appraisal for any valuable items. You should update your appraisals every three to five years and should send your local agent any updated appraisals you receive.
Scheduling allows you to determine the insured value of each specific item. In the event of a total covered loss, you will receive repair or replacement value. There is no deductible and no depreciation. Scheduling may also provide broader coverage, such as the mysterious disappearance, which a standard policy excludes. Another benefit of scheduling is that it provides protection for the full value of a set, so if you lose one diamond earring, it will reimburse you for the set. Some insurers will allow for agreed value, paying the full amount the item is insured for.
If you have a number of “smaller” pieces that when put together represent a large total investment, you can choose blanket coverage for the total value of the collection. In the event of a covered loss, the carrier will pay the value of each item up to its blanket limit. There may be a per item limitation such as $10,000 or $50,000 depending on the carrier, so more expensive items are better off scheduled.
How your policy works:
Your typical household belongings, such as furniture, clothing, appliances, computers and kitchenware are included in the amount of Personal Property you have covered by your homeowners policy (Coverage C). Property is covered on a “specified perils” basis, meaning you are only covered for the perils listed on the policy contract: fire, windstorm, explosion, smoke, theft and vandalism, to name a few. Items are usually covered on an Actual Cash Value basis, subject to a deductible. This means that each item is covered for its market value at the time of the loss. Since depreciation often occurs, the cash value is often well below the cost to replace the item. You can, however, change your policy to replacement cost for a minimal premium.
As you begin the shopping process this holiday season, hold on to your receipts. If necessary, obtain a professional appraisal on the item and call your local insurance agency to inform them of the new purchase. They can help you figure out the best way to insure the item. Of course, feel free to call us with any insurance related questions: 781-444-3050 x148.
Marissa Goldstein is a licensed insurance broker where she specializes in personal and business insurance at Aronson Insurance Agency, a leading, award-winning independent insurance agency located in Needham and Newton. Aronson Insurance represents more than 15 insurance companies and personally services over 6,000 clients. For more information, please call 781-444-3050 x148 or Marissa@AronsonInsurance.com.