Coverage C of the Homeowners Policy: Personal Property
Coverage C: The Best Way to Keep Your Property Protected
Every house has furniture, books, silverware. That’s one of the main reasons we buy houses, so we have somewhere to put all the items we buy. Luckily, the homeowners insurance policy is designed to protect both your house and your valuables.
But what part of your homeowners insurance policy protects your personal belongings?
Coverage C: Personal Property.
Understanding how your home policy works isn’t as straightforward as you’d think. And with the average home insurance claim being over $10,000, you want to make sure you’re fully protected, including your belongings. So, how much of your property is protected by Coverage C? And what do you need to know to make sure all your favorite possessions remain protected under your policy?
What is “Personal Property”
To fully understand what Coverage C protects, you need to understand how personal property is defined by your home insurance company:
Imagine picking up your home, turning it upside down, and shaking it all around. Aside from terrifying the neighbors, you will also find a lot of your stuff will fall out. Everything that ends up on the ground is your personal property and is categorized under "Coverage C: Personal Property" in your homeowners policy.
How are your belongings covered?
Usually, your Coverage C limit is set between 50% and 70% percent of your dwelling’s value. So if you have $300,000 in coverage for your home, you will usually get $150,000 - $210,000 in coverage on your personal belongings. This sounds like a lot, right? WRONG. Most people under-estimate how much personal property they have in their home by 50%. If you are not certain, it's best to follow your agent's suggestion in case the worst does happen.
What are the special sublimits?
Unfortunately, there are limits to what is protected by Coverage C. There are usually 13-15 categories with sublimits in each homeowners policy. The most common sublimits are:
If you want more coverage for any of these categories, you should look at extending coverage on a specific category or scheduling items over $5,000 (like an engagement ring or expensive jewelry). If you have fine art in your house destroyed by a fire, you may find yourself with one less Picasso on the other side.
When scheduling high value items, the insurance company will ask for receipts or a recent appraisal before insuring the item for the requested amount.
What is ACV vs Replacement Costs?
Always ask if your personal property is being covered at actual cash value (ACV) or replacement cost. At Young Alfred, we always quote home insurance policies with Personal Property Replacement Cost included. In short, you should always be insuring your stuff at replacement cost.
ACV will be the cheaper option, but with that comes a risk. In a claims situation, you will only be reimbursed for the remaining value of your items rather than the cost to replace them. Imagine you own a mattress you paid $1000 for and after 5 years it gets destroyed by a fire. Under ACV, the insurance company will say that it only had 5 years of life left and would only give you $500 for a new mattress.
No one buys half a mattress.
At replacement cost, you would get enough for a brand new matures: $1,000. Replacement cost coverage gives you enough to replace the item new vs at a used value equivalent (think of shopping at Ikea vs Craigslist).
Just like any other part of the home policy, there is a deductible you’ll need to pay out first. That’s why it’s always best to only file a claim when the damage is enough to justify paying out the deductible. A $1,000 claim is never in your best interest to file. As a rule of thumb, don't file a claim unless it is more than 2x-3x your deductible and ONLY if it is a covered loss.
Hope that helps you understand how to protect your stuff!
At your service,