Property insurance protects your home and personal items from loss and is usually included in a homeowners or renters insurance policy. Personal property insurance covers the cost of repair or replacement of items, such as furniture, electronics and clothing if they are damaged or stolen. While damage caused by fire, storms and explosions are included in personal property insurance, damage caused by earthquakes and floods often require an additional insurance policy.
How Much Property Insurance Do I Need?
Before getting your policy, you need to assess the value of your belongings, particularly high priced items, like jewelry, art and electronics. It’s also a good idea to take photos of these items or keep the receipts for record keeping purposes. Once you’ve established the value of your items, you can get a personal property insurance policy to cover the cost of repair or replacement if they are damaged or stolen.
Property insurance is typically handled in one of two ways: either by actual cash value or replacement cost. While actual cost value may be cheaper initially, it will only give you the current amount of worth of the item after depreciation. For example, your five year old sofa may have wear and tear and only be worth half the amount you originally paid for it. Actual cash value will therefore only refund you the price that you could currently get for the couch if you were to sell it. Replacement cost coverage is more expensive but it will give you the full amount you would need to buy a replacement couch in new condition.
What Items Are Included As Personal Property?
Most items that are stored in your home but not attached to it are considered personal property. This includes furniture, appliances, electronics, jewelry, artwork, clothing, tools and other personal items that you own.
If you rent, appliances or furniture that came with the rental are not included as your personal property and you don’t have to worry about covering them.
Animals and automobiles are not considered personal property and are not covered by personal property insurance.
Additionally, some high cost items, like jewelry, may need a separate endorsement to the property insurance in order to cover the cost of replacement.
Is Personal Property Insurance Required?
While it’s always a good idea to protect your home and belongings with an insurance policy regardless of the situation, it’s also often required by lenders if you are financing your home or property management if you are renting.