Your homeowner’s insurance policy provides financial protection if your home is damaged in a storm, fire, or other covered peril — but that’s not all. Homeowners insurance policies also offer protection for your personal items, whether they’re in your home or anywhere else. This part of your homeowner’s insurance policy is known as personal property coverage, or Coverage C.
Learn more about what personal property insurance does and does not cover, how it works for renters and landlords, and tips for ensuring you’re properly covered.
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What Does Personal Property Coverage Insurance Cover?
Personal property coverage protects a wide variety of personal belongings. This typically includes (but is not limited to) the following items:
- Appliances
- Artwork
- Bicycles
- Clothing, shoes, and accessories
- Computers, electronics, and cell phones
- Dishes and kitchen utensils
- Entertainment systems, televisions, and other equipment
- Food, wine, and liquor
- Furniture
- Indoor plants
- Lamps, rugs, and other home décor
- Sporting equipment
- Toys
- Trees, plants, and shrubs
Many homeowner’s insurance policies have default limits equal to 50% to 70% of your dwelling coverage limit. For example, if you have $400,000 in dwelling coverage, your belongings may be covered up to a maximum of $200,000 to $280,000.
If your personal property is stolen, damaged, or destroyed while it’s away from your residence, your coverage limits may be lower. Many policies allow you to use up to 10% of your dwelling coverage limit for off-premises items. In this case, a $400,000 policy would give you $40,000 in coverage.
Personal property coverage is typically included in your basic homeowner’s insurance policy. Unless you purchase extra coverage through scheduled property insurance, there’s no additional premium required.
What Doesn’t Personal Property Coverage Insurance Cover?
Certain types of personal property typically are not covered by the personal property coverage in homeowner’s insurance policies. This includes:
- Business data
- Credit cards and electronic fund transfer (EFT) cards
- Motor vehicles
- Animals, including pets
Personal property coverage also does not cover items that have been rented, personal property that belongs to anyone who is renting space in your home, or property inside a room or apartment that’s typically rented out. However, you may add endorsements on your policy to cover some excluded items.
How Does Personal Property Coverage Insurance Work?
Personal property coverage works in much the same way as your policy’s dwelling coverage. If your belongings are stolen, damaged, or destroyed by a covered peril, you can file a claim with your homeowner’s insurance company. If it’s determined that the property and the damage are covered, your insurance company pays to replace the items up to your coverage limits.
Most policies have a deductible, which you’ll need to pay before the insurance company kicks in with their contribution. This means if your property damage is less than your deductible, you will not be paid for your claim. Keep your deductible in mind when deciding whether or not it is worth filing an insurance claim.
Named vs. Open Perils
A homeowner’s insurance policy only covers a personal property loss if it’s caused by a covered peril. This makes it important to understand whether you have a named-peril or open-peril policy.
A named-peril policy provides protection against perils that are specifically named in the policy. This typically includes damage caused by:
- Civil commotions or riots
- Explosions
- Falling objects
- Freezing
- Hail or windstorms
- Ice, snow, or sleet, including if something caves in because of excess weight
- Lightning or fire
- Power surges
- Smoke
- Theft
- Vandalism or malicious mischief
- Vehicles (that are not your own)
- Volcanic eruptions
- Sudden and accidental cracking, tearing, bulging, or burning of certain household systems
- Accidental discharge of steam or water from inside certain household appliances
- Sudden, accidental damage from certain artificially generated electrical currents
With a named-peril policy, the homeowner has the burden of proof and must show that the loss was caused by one of the listed perils.
An open-peril policy covers loss or damage that’s caused by all types of perils unless they are specifically excluded. In this case, the insurance company bears the burden of proof to show that the loss was caused by an excluded peril. Generally, open-peril policies are more expensive than named-peril policies because they offer broader coverage.
Actual Cash Value vs. Replacement Value
It’s important to understand whether your personal property coverage is for actual cash value (ACV) or replacement cost value, as this can make a significant difference in the reimbursement you receive for a claim.
If you choose actual cash value, the insurance company deducts an amount for wear and tear before paying out your claim. Many companies give you the option to upgrade to replacement cost value, which provides the full amount to replace the items, regardless of their age or condition.
Actual cash value personal property coverage is typically included in a standard homeowner’s policy and does not add any additional cost to your premium. However, replacement cost coverage does come with an additional premium. The amount varies depending on the insurance carrier and policy you choose.
If you do not have many personal belongings or most of your possessions are fairly new and under warranty, then ACV coverage may be sufficient. However, if you can afford to upgrade your coverage, then switching to replacement cost value may be advantageous. This is particularly true if many of your possessions are older and so their ACV is lower.
What Is Scheduled Personal Property?
Certain high-value items such as jewelry, furs, antiques, musical instruments, firearms, and fine artwork may have limited coverage under standard homeowner’s insurance policies. However, you may be able to purchase additional insurance, known as scheduled personal property coverage, for specific valuable items. This can help ensure you’re fully covered if the items are stolen, damaged, or destroyed.
Unlike standard personal property coverage, scheduled personal property also covers other types of loss, such as forgetting an expensive watch in a hotel room or dropping your engagement ring down the drain. These policies also may not include a deductible. Many insurance companies require a professional appraisal before offering scheduled personal property coverage on certain items.
How Does Personal Property Coverage Insurance Work for Condos and Rental Property Owners?
When you plan to rent out a property you own, it’s important to understand how this will affect your insurance coverage. First, many standard homeowner’s insurance policies do not cover homes that are used as rental properties because they are considered business assets rather than primary residences. Depending on your circumstances, you may need to purchase landlord insurance, which may be more expensive than a regular homeowner’s insurance policy.
Landlord policies typically offer landlord liability and rental income protection as well as coverage for personal items that you own and use to maintain the rental property. However, these policies generally do not cover the renter’s personal property or your own personal property that you do not use for maintenance.
For example, if you keep your lawnmower or snowblower on the property and it’s damaged, your policy may cover it. However, if you left a television there for tenant use, it would likely not be covered. In addition, if your renter wants insurance coverage for their personal items, they need to purchase their own renter’s insurance.
If you own a condominium, you may consider purchasing condo insurance. While your condo association may have insurance that covers common areas and the outside of the building, it typically does not cover the interior of your condo or your personal belongings. A standard condo insurance policy covers interior walls, personal property, and possibly some fixtures, as well as offering liability coverage.
How Does Personal Property Coverage Insurance Work for Renters?
While a specific amount of personal property coverage is included in a standard homeowner’s insurance policy, renter’s insurance works a little differently. When buying renter’s insurance, you need to decide on the amount of coverage you need, typically by estimating the total value of your property. Unlike homeowner’s insurance, renter’s insurance policies do not offer any coverage for damage to the dwelling itself.
Personal property coverage under a renter’s insurance policy works much the same way as it does for homeowners. If your personal property is stolen, damaged, or destroyed by a covered peril, the insurance policy will reimburse you up to your policy’s limits.
Renter’s insurance also covers property that is off-premises, including items that are in a storage unit, in the back of a moving van, or at someone else’s house. However, this is typically limited to 10% of your total coverage. For example, if you had a $25,000 renters insurance policy, your off-premises coverage would be $2,500. Your renter’s insurance may also have coverage limits for certain high-value items. However, just as with a homeowner’s policy, you can purchase additional endorsements or riders for more coverage.
How Much Personal Property Coverage Do You Need?
Each person’s personal property coverage needs are unique. To determine how much coverage you need, begin by creating an inventory of everything you own and the estimated cost to replace it. Then, compare this to the amount of personal property coverage that’s already included in your homeowner’s insurance policy to determine whether it’s sufficient.
As a reminder, your personal property coverage is typically set as a certain percentage of your dwelling coverage. However, if you do not think you have enough coverage, you may be able to adjust it for an additional cost.
With a renter’s insurance policy, there is no set policy amount to adjust. Instead, you can complete a home inventory to estimate your property value, then choose the amount of personal property protection you want to purchase.
How to Buy Personal Property Coverage
When you purchase a homeowner’s, renter’s, or condo insurance policy, personal property coverage is included. You will not need to purchase a separate policy. Instead, you can focus on ensuring you have the right amount of coverage.
However, if you have valuable items such as musical instruments, fine art, or expensive jewelry, then purchasing scheduled personal property coverage would best protect those belongings. You can typically add this to your homeowner’s or condo insurance policy, or purchase it separately if you are a renter. If you believe you need additional insurance, contact your homeowner’s insurance company to discuss your options and the extra cost associated with any changes.