If you own a home, you undoubtedly have stuff—you know, things, items, objects, and the like. Everyone loves their stuff.
But sometimes, we unintentionally lose, damage, or even destroy our stuff. Things like clothes, electronics, and art that hold a lot of sentimental and monetary value can be gone in an instant when you least expect.
Insurance can’t replace memories, but contents insurance at home provides the coverage you need to replace the belongings you cherish.
Let’s dive deeper into what home contents insurance is so you can better understand how to guard yourself against accidents involving your personal property.
What Is Contents Insurance?
Contents insurance is also known as personal property coverage, Coverage C insurance, and sometimes personal items insurance or personal possessions insurance. Homeowners insurance policies typically include contents coverage.
Contents insurance helps to cover the cost to repair or replace items lost in what your home insurance policy defines as a “peril.”
A peril is an event that causes a loss or damage to your personal property, like a fire or theft. In other words, a peril is a worst-case scenario for your items.
If your home insurance were a couch, you could think of contents insurance as its cushions because it makes up a big part of the policy. The main frame of the couch would be your dwelling insurance, which covers your actual house and all of its permanent installations. (Contents insurance coverage does include couches and most other furniture, by the way.)
And like other types of insurance, your contents insurance includes a deductible. A deductible is the portion of the contents insurance claim you agree to pay out of pocket before the insurance company steps in.
So, what items does contents insurance cover? Basically, anything “loose” counts as your house’s contents, with a few exceptions.
In the following sections, we review what you can expect from your contents coverage.
What Does Contents Insurance Cover?
With so many things in your possession at home, it’s hard to know if certain items would fall under contents coverage.
To better understand what you can expect, we list some categories of what is and isn’t covered below in order of relative size.
Types of Items Contents Insurance Covers
- Furniture
- Sports equipment (e.g., bicycles, basketballs)
- Electronic devices (e.g., TVs, laptops)
- Appliances not built into your home (e.g., toasters, blenders)
- Decor
- Art
- Kitchenware
- Firearms
- Clothing
- Books
- Jewelry
- Items that belong to guests, dependents, spouses, and family members living at your home
What Contents Insurance Does Not Cover
The list below is not exhaustive because so many things fall into the “stuff” category. If you’re unsure about your contents coverage for an item, contact your insurance representative to find out.
In general, contents insurance does not cover the following things:
- Vehicles for use on public roads
- Permanently installed features (e.g., carpeting, central AC units, cabinets)*
- Items used primarily for business
- Possessions owned by any non-family tenants or roommates
- The full value of some expensive items (see the section on “sub-limits” toward the end of this article)
- Misplaced items
*Note: These features are usually covered by the dwelling insurance part of your homeowners insurance policy.
Traveling or Moving With Your Belongings
Coverage under contents insurance typically includes your belongings only while they’re physically on your home’s premises.
However, your policy may insure contents when they are temporarily off your home’s premises while traveling. For example, that’s helpful if your laptop was stolen while you were tanning by the hotel pool.
Similarly, contents insurance covers personal belongings on the way to a new home when moving.
Some scenarios may not be covered, though, such as a mover accidentally damaging a lamp while packing. Consult your home insurance contents policy to better understand how your belongings are covered while moving.
If you’re worried about movers mishandling your possessions, decide if hiring movers is worth it.
What Does Contents Insurance Protect Against?
We’ve talked about lost and damaged stuff, but what does contents insurance actually protect against?
Insurance companies define covered perils in two ways, and which one you have determines when they will cover your belongings.
When your home insurance has named perils, your policy lists specific events that may cause your belongings to be damaged, destroyed, or lost. Named perils can include hail, fire, vandalism, lightning, and theft.
If your home insurance is an open peril or all risk policy, your belongings are covered against all potential perils except the ones the insurer specifically excludes. In other words, instead of telling you what you’re covered against, your insurer tells you what you aren’t covered against.
As you might imagine, open peril contents insurance creates a more expensive premium because it protects your items against more perils.
At OpenHouse, we offer a broad perils policy in which you can customize your coverage.
A Note on Flood Coverage
Home insurance usually does not cover flood damage, even to belongings, so you will have to purchase a separate flood insurance policy.
How Much Contents Insurance Coverage Do You Need?
Over the years, you may have made tens of thousands of dollars worth of purchases. A peril like a house-consuming fire could be doubly devastating if it destroys most of your personal property.
Luckily, the value of your dwelling insurance determines how much contents coverage you get. As we mentioned earlier, dwelling insurance covers your home’s structure, including areas like your attached garage, screened-in porch, and countertops.
Contents coverage is typically limited to 50% to 70% of your dwelling coverage. For example, if the value of your dwelling insurance is $300,000, your personal property coverage would be limited to between $150,000 and $210,000.
While the 50% to 70% of your dwelling insurance describes your contents coverage limits, the amount of coverage you’ll need (aka what percentage limit you choose) depends on how much you own and how many things you want to cover.
Creating a home inventory is a reliable way to figure out how much contents coverage you need.
At OpenHouse, we offer a wider range of contents coverage, ranging from no coverage (0%) to 70% of your dwelling insurance, so you have more control over your coverage and costs.
Making a Home Inventory
A home inventory is a catalog of all your items and their value to determine how much coverage you need. We recommend erring on the side of more coverage to ensure your items are protected.
Ideally, you would create a home inventory early by listing all the items you own when you move into your home—from your pants to your potato peeler.
Then, you would add up the estimated values of each item category and round to the nearest $5,000. For example, if everything you own equals $33,000, round it up to $35,000 (or more) to ensure you have enough coverage.
Some tips to help you make an accurate home inventory include the following:
- Take photos or videos of all the items you want to cover.
- Compile any receipts or appraisals you have for your items.
- Note the serial numbers and models of any tech devices you own.
- Note the year of purchase for all the items you can.
- Categorize your items to more easily keep track of them.
Does this mean that contents insurance will pay to fully replace all your covered personal belongings if you lose them?
Sometimes. That’s where contents insurance types and sub-limits come into play.
Contents Insurance Sub-Limits
Under your contents insurance, your policy may have coverage limits for particularly valuable items like antiques or jewelry.
These are called sub-limits or special limits because they restrict how much coverage you can get for specific categories of items within your overall coverage limit. If a coverage limit is the roof of your house, think of a sub-limit as the ceiling.
For example, let’s say your contents insurance has a coverage limit of $150,000 but a sub-limit of $1,500 for jewelry. If you had a valuable necklace worth $3,000 stolen from your home, your insurance would pay only $1,500.
Furthermore, some contents insurance policies include per-item limits. For example, let’s say you lose a set of valuable trading cards in a fire. Your policy’s sub-limit could allow for $1,000 in coverage for the whole set, but the per-item limit might be $250, meaning you cannot receive more than $250 on a single card, even if it’s worth more.
If you want full coverage for your more valuable items, you may be interested in scheduling your personal property (more about this below).
Digging Deeper: 2 Types of Contents Insurance
There are two types of contents coverage to be aware of when purchasing your home insurance policy.
Both offer very different coverage, so be sure to talk to your insurance agent to evaluate your situation and determine which coverage is best for you.
Actual Cash Value (ACV)
ACV is a type of contents insurance that pays you the value of an item minus depreciation (the wear and tear of the item since you bought it).
This type of insurance is less expensive because it does not return the amount you paid for a lost item when you first bought it.
For example, you would get a much lower payout if you purchased a pair of shoes for $120 a few years ago that were fraying and stained once they were stolen or damaged.
Replacement Cost Value (RCV)
RCV is a type of contents insurance in which the insurer reimburses you to replace a lost or damaged item with a new item of similar quality.
This type of insurance is the more expensive of the two because it covers the cost of a new item rather than the current value.
For example, if you purchased a computer monitor a few years ago, insurance would reimburse you for the full amount of a brand-new monitor regardless of depreciation.
At OpenHouse, we offer RCV contents insurance to ensure you get what you paid for when you experience a loss. If you’d like to switch to ACV contents coverage, you can request this change from one of our insurance agents.
Extra Coverage With Scheduled Personal Property
Scheduled personal property (also called an insurance rider, floater, or endorsem*nt) is an item you add separately to your home contents insurance. You might add a rider to your insurance policy if its value exceeds the sub-limits.
For example, you may add your highly valued engagement ring to your policy.
Just as choosing a policy with RCV or open peril is more expensive, scheduling personal property may increase your premium. However, all of these options give you the peace of mind that comes with insuring you for your contents more thoroughly.
Discuss with your insurer how to schedule the entire value of your items on your policy.
Contents Insurance for a Content Life
While material things aren’t everything, they can hold a lot of importance in your life.
Though you likely have contents insurance wrapped into your home insurance, you will greatly benefit from understanding your policy’s coverage, including specific limits, sub-limits, and deductibles.
Take the time to document all the items you own in your home, talk with your insurance agent about contents coverage, and find out what options you have. You will be more aware of when and how to recover the value of lost items.
