Does Homeowners Insurance Cover Theft?

One of the first things a new homeowner does is buy a homeowners insurance policy. However, if a loss is due to theft, they may worry if theft is a covered peril. Here, we tell you about what the typical home insurance policy covers and offer tips for getting the most from your policy.

When does homeowners insurance cover theft?

A typical homeowners policy includes personal property insurance, and that personal property insurance covers loss due to theft. So, if an intruder breaks into your home or detached structure and steals valuables, your insurance policy should cover the personal property loss.

There are limits to how much theft coverage will pay, typically set as a percentage of your dwelling coverage. Most policies provide personal property coverage at 50% to 70% of your dwelling coverage. Let’s say your insurer caps personal property coverage at 50%, and your dwelling is insured for $500,000. That means that your personal property is covered up to $250,000.

It’s important to note that an insurer may only reimburse you for the depreciated value of the items stolen. If you want a policy that pays to replace your belongings with brand-new comparable items, shop for an insurance company that offers optional full replacement value coverage.

When is theft not covered by homeowners insurance?

There are circumstances under which theft will not be covered by home insurance policies. Here are some of them:

• High-end belongings: Unless you carry supplemental coverage on high-end belongings like fine jewelry, rare artwork, or specially crafted musical instruments, those items are only covered up to a certain amount, and a standard policy will not pay more than that amount. To ensure that you have adequate coverage, you’ll need to purchase additional coverage through your insurer.
• Theft while the home is under construction: If your home is under construction and no one is living there, your homeowners insurance coverage may not protect against theft.
• Theft while you’re living away: If you live somewhere other than your insured home for more than two months and the home is unoccupied when the theft occurs, your insurance company may deny the claim.
• Unreported theft: If a police report is not filed following the theft or you wait 60 days or more to submit a claim to your insurer, you may not be paid.
• When the crime occurs in a rented room: If you’re renting out a room in your house and someone burglarizes it, your insurance company is unlikely to pay a claim. Renters should purchase renters insurance to cover their belongings.
• Theft committed by a policyholder: If the theft was perpetrated by someone named as an insured party, the insurance company will not only deny the claim but that person may also be convicted of fraud. Let’s say your homeowners policy includes both your name and your partner’s name. Your partner decides to move a bunch of stuff out of the house and tell the insurance company that you’ve been robbed. It won’t take long for the company to figure it out.
• A trailer, camper, or watercraft stolen while not on your property: Unless they are on your property when the theft occurs, a claim would likely be denied.

Does homeowners insurance cover damage to your home during a break-in?

Yes. While the personal property portion of a policy covers your belongings, any damages to your home due to a break-in are covered by dwelling coverage.

How can I calculate the replacement cost of all my things?

The best way to calculate the replacement cost of your belongings begins before a loss ever occurs. It starts with taking a picture or video of every room, including closets. Once you have that done, sit down and make a list of your belongings. You can group things together to save time. For example, if you have 20 picture frames, you can write “20 picture frames” once rather than write “picture frame” 20 times. Make it a point to include the serial number on any possession you own that carries a serial number.

Go online to learn how much each item is selling for today. Unless you’ve opted for a policy with full replacement cost, you’ll likely get the depreciated value. Still, estimating the full replacement price is a good place to start.

Add up the values of everything on your list, and you have a good idea of their replacement cost. If you’re concerned about receiving depreciated value, be sure to ask about optional coverage that pays the full replacement cost.

Special limits of liability for stolen valuables

As mentioned, high-value items typically receive limited coverage. To give you an idea of how much coverage you’re likely to have, here are some categories and how much those special limits may be:

• $1,500 for loss of jewelry, watches, precious and semiprecious stones, and furs
• $2,500 for loss of firearms
• $200 for loss of money, banknotes, coins, gold, and silver
• $1,500 for loss of watercraft, trailer, or semi-trailers
• $2,500 for loss of silverware and silver-plated ware
• $1,500 for loss of deeds, securities, letters of credit, passports, and personal records

If these amounts do not seem sufficient, speak with an insurance agent about buying additional coverage.

How to file a homeowners insurance theft claim

In the event a theft occurs, here are the appropriate steps to take:

Notify the police. Your insurance company will likely ask for a copy of the police report or case number.

Make emergency repairs. Let’s say your front window is broken. Have the window replaced and save the receipt so you can be reimbursed.

Get your information in order. Take photos of all damage and where items were taken from. If possible, write down the following:

• The brand and model of the stolen property. The serial number is also important if you have it.
• Where you purchased each item, when it was bought, and how much you paid.
• The estimated replacement cost.

How to protect your home against theft

There’s no way to make your home 100% theft-proof, but you can make it more difficult for a thief to get away with your belongings.

• Install a burglar alarm system and make sure it’s connected to your local police department.
• Add motion-detection lights to the exterior of your home.
• Install high-quality deadbolts on exterior doors.
• Install video surveillance cameras.

Hopefully, your home is never burgled, but as a homeowner, it pays to be prepared.