So many home buyers focus on selecting the right dwelling coverage that they often overlook the importance of choosing a homeowners insurance policy with adequate contents coverage. A home insurance policy providers dwelling coverage, liability coverage, and contents coverage designed to pay for your personal belongings if they are stolen, damaged, or destroyed. If you are not sure what to look for in terms of contents insurance when you are building a home insurance policy, read on and learn how to choose the right policy with the proper coverage limits and valuation methods.
You Can Raise Content Limits
The typical homeowners insurance policy provides the policyholder with 75% of the dwelling coverage limit to cover the contents of the home. Contents include any personal belongings that are not permanently fixed to the building. You need to take an inventory of all of your furniture, your appliances, your clothing, your electronics, and anything else that you own to determine if 75% of the dwelling limit is adequate. Keep in mind that you can raise this limit to meet your needs if necessary.
Know the Limits for Valuable and Rare Items
Most home insurance companies will limit the amount of coverage that will be provided for items like jewelry, sporting equipment, collections, artwork, and antiques. Read through the limits and determine if you have valuables that will not fully be covered in the event of a claim. You do have the option to schedule personal property for an additional premium. When you schedule the contents, you provide an appraisal and the item is covered for the entire appraisal amount. Scheduling items is a great way to protect wedding rings, art, and even you stamp collections.
Replacement Cost vs. Actual Cash Value
Did you know that not all insurance companies value your contents the same when you file a claim. If there is a fire in your home and you lose all of your belongings, you want peace of mind in knowing that the insurer will give you the money you need to buy new possessions. Claims valuation methods are how the insurer values the contents in your home. A company can choose Replacement Cost or Actual Cash Value valuations. Actual Cash Value takes depreciation into account and deducts the depreciation. Replacement cost does not take depreciation into account. Choose a policy that does not make it difficult to replace your belongings by choosing a policy with a Replacement Cost endorsement.
As you can see, there are several factors that need to be considered to ensure your belongings are protected. Take an inventory of your possessions, know the terms of the policy, and get the protection you need and deserve.