When you buy homeowner's insurance, the coverage you have should include the structure of your home as well as everything you have in it. The things you have in your house are called your personal belongings, and it is always important to have enough coverage for these things. As you evaluate your policy and your needs, here are four things to know when it comes to insuring your personal items.
Most companies use a certain percentage as the basis
The policy you buy should offer coverage for both the structure and your personal possessions, and the most common way insurance companies determine a coverage amount for personal possessions is by using a percentage. This percentage may vary; however, it is common for it to be 50%. This means that if your house is covered for $250,000, you will have $125,000 of coverage for your personal belongings. You can stick with this recommended option, or you can choose a different amount if you want to.
Your coverage might not actually cover everything
The coverage you have with the amount you choose for personal belongings should cover replacing all your basic things, but it may not cover every last thing you own. The main things it will not cover are valuable items that are costly to replace, such as jewelry items. To cover these items, you would need to add specific coverage for each item, and your insurance agent can help you do this.
You should find out the coverage method on your policy
With your policy, it is also important to ask about the valuation method used if you ever file a claim. If you lose everything you own to a fire, the valuation method used with your policy will determine how much money the insurance company gives you to compensate you for your loss. If you have the actual cash value method, you will only receive compensation that covers the actual value of your items. If you have replacement cost valuation, it will compensate you by determining the costs needed to replace the things you have.
Taking an inventory is helpful for many reasons
In any case, you should consider taking an inventory of everything you own before you experience any type of peril. Doing so can help you prove what you had and can help you make sure everything you have is thoroughly covered under your policy.
It is important to evaluate your homeowner's insurance policy every now and then to make sure it is sufficient for your needs. If you need more information about this, talk to a homeowner's insurance agent today.