Paying for homeowners insurance is a necessary evil of homeownership. You want to know your property has protection in the event of theft, vandalism, fire, or some other natural disaster.
Yet, there is more to homeowners insurance than covering just the structure of your home. You need to protect what’s inside your home too. Home insurance contents coverage is the part of your homeowner’s insurance that covers the belongings in your home.
Read on to learn more about contents coverage on homeowners insurance, how it works, and even how much coverage you need.
What Is Homeowners Contents Coverage?
The dwelling part of your homeowner’s policy covers your actual home. If your home has a fire or a flood, this is part of the coverage that would pay to have your home repaired or rebuilt. But there’s much more to your home than the walls and roof.
What happens if fire rages through your home? Not only do you lose your home, but also all of your belongings inside too. This is where personal property insurance coverage becomes important.
This is the part of your homeowner’s policy that would pay for the belongings lost.
What’s Covered Under Contents Coverage?
You might think, great, I have homeowner’s insurance, all my stuff has coverage, right? Not exactly. There are many things covered, but not everything.
It covers the things you would expect it to cover like your home items, furniture, and clothing. It also covers:
- Jewelry and precious metals
- Electronics like computers and video game equipment
- Firearms and ammunition
- Property of guests and live-in employees
The policy doesn’t automatically cover the cost of buying the item new. This will depend on what coverage you have. More on this in a bit.
What’s Not Covered?
You shouldn’t assume just because you have contents coverage that everything in your house gets covered. In fact, there are some things that will automatically not be covered by insurance.
These things include:
- Boilers and furnace
- Specialty rugs
- Other fixtures
- Motor vehicles
- Property of nonfamily roomers, boarders, and tenants
You may also have some items that are high in value. For example, you might have fine jewelry or an art collection that is high in value. Because of limits in place for contents coverage, you’ll want to get a special rider on your policy to protect these items.
Make sure you sit down with your insurance agent and ask for it to get spelled out exactly what would be covered and what would not be covered.
No matter the coverage, most policies have limits on how much they will payout for contents coverage. The limit is usually based on the value of the homeowner’s policy and the value of the home where the personal property is located and insured.
Generally speaking, contents will be covered from half to three-quarters of the value of the home. So, if you have a home that’s valued at $400,000, the contents cap will likely be between $200,000 and $300,000.
What gets covered and for what value will be dependent partially on the type of coverage you carry for contents recovery.
Types of Contents Coverage
There are a few ways that your homeowners insurance policy can cover the contents of your home. More specifically, there are a few ways that you can be paid for the contents of your home should you make a claim to the insurance carrier.
It’s good to understand these options prior to needing them since it impacts how much the insurance company actually pays. Let’s take a closer look.
Actual Cash Value
Most homeowner’s policies have carried actual cash value replacement for personal belongings. This means that if you need the insurance company to replace items under actual cash value, they would pay you for what you bought it for when you bought it, but first, they would subtract the depreciation.
So, if you bought furniture 5 years ago, the insurance would only pay you what you paid for it years ago after depreciating its value for the 5 years you used it already.
This type of policy makes it difficult to actually replace all of your personal property should you need to. Certainly, they would cost more than when you bought them and you lose the depreciated amount.
In essence, you would only get what something costs from the insurance company if you bought something and on the same day made a claim for it.
Replacement Cost Value
Most homeowners insurance policies now come with replacement cost coverage. With replacement cost coverage, you get rid of the depreciation component of the coverage. You would be paid what it costs to replace the item should you need to buy it now.
If you add special riders to your policy, you want to make sure they are for replacement value for the items. You already know they wouldn’t be covered under your regular contents coverage. Make sure you know the value of the items and get the right amount of replacement value coverage to protect those high-value items.
What Should You Do If the Insurance Company Won’t Pay You What You Deserve?
You get homeowner’s insurance for those times in life when things go wrong. You want to make sure your home and possessions could get repaired or replaced if needed. But what happens when the insurance company won’t pay the homeowners insurance contents coverage? Or they won’t pay enough?
If you have had a disaster and the insurance company isn’t doing right by you, you may need legal help. It may take the right attorney working on your behalf to stand up to the insurance company and get you the help you need.
Get the Personal Property Coverage You Need to Be Protected
You get a homeowners insurance policy to make sure your possessions can be replaced in the event of a disaster in your home. You want to make sure you have enough coverage and the right coverage so you really could replace your contents if it was necessary.
If you need legal help because an insurance company is giving you the run around, we are here for you. Contact us and request a free case review to see how we can get you the help you need in dealing with your contents insurance coverage.