October 10, 2020

How much personal property insurance do you need?

Article updated February 8, 2024

Everyone needs personal property insurance for items such as the contents of your living room.Whether you are a new homeowner or have lived in your home for decades, you probably have more possessions than you think. If you have only a vague idea of what is stashed in the basement or tucked away in a little-used closet, you might want to consider finding some time to sort through it.

Why? Because it is probably worth more than you think. And it is probably underinsured. The only way to find out is to dig into it. You may discover some treasures amid the junk and giveaway items. Perhaps you’d lost track of, or even forgotten about, beauties such as your set of high school yearbooks or grandma’s pearl necklace. Or maybe you hadn’t realized just how many pairs of shoes your loved one has accumulated over the last 10 years.

Now that you’ve been reminded of these treasures, you probably want to protect them. You want to put your mind at ease that all will be covered in the event of a disaster such as a fire, tornado, or hurricane.

How much coverage is enough?

The first step is to investigate whether you have enough personal property insurance coverage. Your homeowner policy should cover all or most of your assets. But does it? Whether your treasures include that 1970s collection of record albums, antique furniture, modern art, kitchen appliances, a shelving unit stacked with computers and tech supplies, the contents of the tool shed or your closet full of clothing, you may find that the cumulative value adds up to a lot.

Will your insurance cover their replacement should they be damaged or destroyed in a home catastrophe?

Most homeowner policies cover standard items such as clothes, furniture, sports equipment and a variety of other personal items if they are stolen or destroyed in a covered disaster. Policies most often cover these items for up to 50 percent to 70 percent of the total amount of insurance you have on your home, according to the Insurance Information Institute. Will your possessions all fall within your policy’s limit? You might want to find out, before a problem arises.

It’s smart to get a handle on the quantity and quality of your possessions. It’s the best way to ensure your financial recovery following a disaster. Conducting a home inventory is a smart move. Keeping records of all your possessions makes it much easier to provide the necessary documentation to support a claim.

How much are my things worth?

Consider how much you paid for your possessions and investigate how much these items are worth now. Again, a home inventory would be helpful to attain accuracy. Consult with your insurance agent to determine whether your homeowner policy would cover their value in case of disaster. It might be in your best interest to extend your coverage limit for personal property.

You should also discuss whether to insure your personal possessions for actual cash value or replacement cost. Insuring for actual cash value costs a bit less, but payment on a claim would include depreciation for older items. Insuring for actual cash value costs a bit more, but will cover the entire cost to replace these items (up to a certain maximum).

Additionally, take a close look at your more valuable possessions. Do you have costly or valuable items such as jewelry, furs, special collections or art? Homeowner policy coverage for these items is typically limited to between $1,500 and $2,000. Perhaps you need additional coverage. Consider having these items appraised and then insuring them to their full value through a special personal property endorsement or floater.

There’s no better time than the present to make sure your possessions are protected. Do the homework now to avoid extra stress and trouble during an emergency. Hopefully that day will never come, but your mind will be at ease knowing all your assets are covered, just in case.

by Kris A. Mainellis