Coverage ‘C’ in the standard Homeowners policy offers limits of coverage for your Personal Property, or as it is sometimes called ‘Contents’.
Typically this coverage is set at 50% of the Coverage ‘A’ (the replacement value of your dwelling).
However, higher or lower limits can be purchased.
Most all insurance companies “cap” the amount they will pay for personal property, and policies take depreciation into account when assessing damage to personal belongings at the time of loss.
This is called ACV or Actual Cash Value. The better way to insure your Personal Property is opting for Replacement Cost or RC on your Personal Property.
This Replacement Cost coverage will pay the cost to replace items, without considering depreciation, up to your policy limits. ACV considers original cost, then depreciates for wear and tear and age, and then your cost to replace is calculated.
Simply put, that $1,500 LCD TV that you bought 5 years ago, might only bring pennies on the dollar in the event of a loss event when ACV is chosen. We always recommend Replacement Cost for our customers, as the slightly higher cost in policy Premium offers a far greater value should there be a loss.
However, for certain valuables, such as Jewelry, Watches, Guns, Musical Instruments and Collectibles, these policies may have specific “caps” that might be as low as $1,000 to $2,500.
You should check what the limits are for your policy.
A scheduled personal property (SPP) endorsement is the best way to ensure that these High Value Items are adequately and properly covered. The cost for scheduling such items is surprisingly affordable to add or endorse into your Homeowners Policy, and in the end will offer the true piece of mind that comes with knowing that you and your possessions are properly insured.