Do you need personal property coverage? If you own more stuff than you could afford to replace, then the answer is yes. Whether you’re a renter, a condo owner, a mobile home owner, or a single-family home owner, you can purchase an insurance policy that will help you repurchase your belongings after a loss covered by your policy (such as a fire).

What Is Personal Property Coverage?

Personal property coverage is a standard part of a homeowners insurance, condo insurance or renters insurance policy that covers the contents of your home if they are damaged, destroyed or stolen.

We recommend having “replacement cost” coverage for your personal property. This coverage reimburses you for new, similar items. If you have only “actual cash value” coverage your reimbursement will be based on the depreciated value of your belongings. You’ll have to pony up the difference if you want to buy new items.

Your clothes, furniture, books, dishes, appliances and everything else in your house or apartment are generally considered “personal property,” but there are some exceptions that we’ll discuss below.

A standard home insurance, renters insurance or condo insurance policy will cover damage or loss of your personal property if it was caused by a “named peril.” These perils include the problems you’d expect, like fire and theft.

For example, here are the problems covered by a standard home insurance policy (also called an HO-3):

• Accidental discharge or overflow of water or steam
• Aircraft
• Explosion
• Falling objects
• Fire
• Freezing
• Hail
• Lightning
• Riots
• Smoke
• Sudden and accidental damage due to short-circuiting
• Sudden and accidental tearing, cracking, burning or bulging
• Theft
• Vandalism
• Vehicles (including impact from a vehicle, but not the vehicle itself)
• Volcanic eruption
• Weight of ice, snow or sleet
• Windstorm

If you’re looking for more coverage, an “open-peril” policy, also often called a HO-5 home insurance policy, has broader protection for personal property. With an open-peril policy, anything that’s not specifically listed as an exclusion is covered. Not all insurance companies offer this type of policy.

What Does Personal Property Coverage Include?

Personal property coverage will pay to repair or replace your belongings as long as the loss occurred because of a problem covered by the policy.

For example, if high winds blow a tree over, the tree smashes through your roof and rain soaks everything in that room, personal property coverage would pay to repair or replace your damaged items.

Or, if burglars smash your sliding glass door and walk out with your 65-inch 4K OLED TV, your personal property coverage will cover the cost to buy a new television.

The limit of your personal property coverage will usually be somewhere in the range of 50% to 70% of your dwelling limit. In other words, if you have $300,000 in coverage to rebuild your home, you might have $150,000 to $210,000 in personal property coverage. If you want more personal property coverage, you can typically buy more.

Personal property coverage also includes protection for your belongings when you’re away from home—anywhere in the world, in fact. Your policy may have a much lower coverage limit for problems that occur while you are away from home, such as 10% of your usual personal property coverage.

Your policy may also cover a guest or household employee’s personal property while they’re at your home, provided you are living there at the time.

What Does Personal Property Coverage Not Include?

Personal property coverage doesn’t protect your stuff against problems your homeowners, condo or renters policy doesn’t cover, such as an earthquake or floods.

For example, if an earthquake or flood damages your belongings, the personal property coverage from your homeowners policy won’t reimburse you. If you want coverage for those natural disasters, look into earthquake insurance and flood insurance.

Personal property insurance also doesn’t cover every type of property you may own. It may completely exclude coverage for certain things, like pets, vehicles and aircraft.

In addition, if you rent out part of your home, your homeowners insurance policy won’t cover the tenant’s personal property. They’ll need to purchase a renters insurance policy to cover their belongings.

And if you rent out your personal property, your homeowners insurance won’t cover those items.

Personal property coverage also doesn’t protect your belongings from theft at a home that’s under construction. There are additional risks associated with keeping your stuff in a structure that’s not fully built and that you don’t occupy.

Personal property coverage sub-limits

Some of your personal property may not be excluded from coverage but will have sub-limits for reimbursement. Here are some sub-limits found in a standard home insurance policy:

• Cash and gift cards: $200
• Theft of jewelry, furs, watches, precious and semiprecious stones: $1,500
• Trailers not used with watercraft: $1,500
• Watercraft, including attached or unattached trailers, furnishings, equipment, parts and motors: $1,500
• Business property: $2,500
• Theft of firearms and related equipment: $2,500
• Theft of goldware, pewterware and silverware: $2,500

For valuable items, you should consider scheduling your personal property.

What Is Scheduled Personal Property Coverage?

Scheduled personal property is an optional coverage to a home, condo or renters insurance policy that provides more coverage for high-value items, like jewelry or artwork. It is also called an endorsement, floater or rider.

For example, if you don’t schedule your $10,000 watch and it is stolen, your insurer will only reimburse you up to the sub-limits on your policy, which may only be $1,500.

How Much Personal Property Coverage Do I Need?

You want enough personal property coverage to compensate you in the event of a total disaster. If a tornado completely destroyed your house, what’s the value of all the stuff you’d lose, excluding the structure? If you had to buy everything again, down to new plates and socks, how much would that cost? These are the questions to ask yourself when evaluating coverage options from insurers.

A standard home insurance policy usually sets the personal property coverage to 50% of your dwelling coverage amount. So if your dwelling coverage is $300,000, you likely have $150,000 for personal property. You can increase that coverage if needed. Conducting a home inventory to determine the value of your belongings can help.

When buying a homeowners, condo or renters insurance policy, you can typically choose between actual cash value vs. replacement cost coverage of your personal property. Which type of coverage you select determines how much you will be reimbursed for a loss.

Actual cash value

An actual cash value (ACV) policy pays for your damaged item, minus depreciation.

For example, let’s say your leather couch is destroyed in a fire. If you purchased a leather couch 10 years ago for $2,000 and the depreciated value is $1,000, then ACV would only pay $1,000 (minus your deductible).

Replacement cost coverage

Replacement cost coverage is generally a better option compared to actual cash value. It will reimburse you for the cost to buy new items similar to those you lost.

If your leather couch is destroyed in a fire, you will be reimbursed for the amount it will cost you to replace it with a new, similar leather couch.

How Does Personal Property Coverage Work?

Personal property coverage will reimburse you for losses that exceed your insurance deductible. Let’s say your entire home burns to the ground and you lose $150,000 in personal property. If your deductible is $1,000, you’ll get $149,000 to replace your personal belongings.

Your insurance will pay until you reach the personal property limit in your policy.

After a loss, you’ll need to take specific steps, such as:

1. If the loss is a theft, file a police report.
2. Protect your property from further loss. If hail damages your roof and there is a leak, make a temporary repair to keep rain from getting in.
3. Take photos or videos of the damage and back them up in the cloud.
4. Inform your insurance company as soon as possible and file a claim.
5. Create a detailed list by room of the stolen, damaged or destroyed items and their brand or manufacturer, model number if available, age and condition.
6. Collect any documents that substantiate the value of your personal property and submit them to your insurer as requested.
7. Allow a claims adjuster from your insurance company to inspect the damaged property upon request.

Ideally, you will have created a home inventory at some point before your problem. Using photos or videos, capture everything in your home. Open drawers, cabinets and closets. Go up in the attic, into the garage and into the basement. Document everything.

Then redocument it annually. It’s a good idea back up your home inventory to the cloud so it can’t be destroyed along with your home.

How Much Does Personal Property Insurance Cost?

Personal property coverage is automatically included with most types of homeowners insurance, including HO-3 and HO-5 policies, as well as renters insurance (HO-4) and condo owners insurance (HO-6) policies. It’s not itemized as a separate cost that you can accept or decline.

You will pay more if you choose replacement cost coverage because you will receive more in a claim than if you had actual cash value coverage.

Related: Average cost of homeowners insurance

How Can I Save on my Home, Condo or Renters Insurance?

The best way to save on a homeowners, condo or renters insurance is to compare home insurance quotes from several insurance companies. Remember that you’re not just looking for the best price—you’re looking for the best value.

For example, if you’re a homeowner, a good way to get started is by determining how much homeowners insurance you need, which includes your personal property. Then you can begin to compare quotes to find a policy that fits your coverage needs at a reasonable price.

Besides shopping around, you can also reduce your premiums by going with a higher deductible. That’s because your insurer will pay out less if you file an insurance claim. Just keep in mind that your deductible is subtracted from your insurance check, so if you go with a higher deductible, you’ll get less money if you end up filing a claim.

You can also ask about any homeowners insurance discounts you may be eligible for, such as a home security discount.

We don’t recommend cutting corners on coverage to save money. For example, if you decide not to schedule high-value items or you choose actual cash value over replacement cost coverage, you could find yourself woefully underinsured.