If you have an insurance policy for your home, it typically references coverage for “contents.” Specifically, this refers to your personal belongings or property. It’s an important part of your policy, since it covers what could be significant losses if your personal property is affected by theft, fire, or other types of applicable loss or damage. Below, the experts at Altra Insurance Services, a leading provider of home insurance San Diego residents rely on for exceptional service, go over the basics of the term “contents” as it applies to home insurance.
For home insurance purposes, “contents” refers to practically anything you personally purchased that’s not a permanent part of your home. This includes such things as:
• Laptops and similar electronics not related to your home’s electrical system
• Children’s toys and games
• Paintings and similar items of some value to you
• Antiques and other items of this nature that could be difficult or expensive to replace
Replacement Cost Coverage
Personal property coverage that applies to your home’s personal contents is typically covered in one of two ways. The first option in the event of a loss is replacement cost coverage. In this instance, you would recover the costs related to replacing any damaged or stolen items. These could be replacement items that are either the same or very similar in terms of quality and purpose.
Actual Cash Value Coverage
If you opt for this approach to personal property coverage, you would be paid the cash value of the insured items. However, there’s one potential drawback. According to the Insurance Information Institute, depreciation is often considered when determining actual cash value at the time the loss occurs.
Possible Impact on Your Premiums
Let’s say a laptop you purchased five years ago is damaged. If you have replacement cost coverage, you would likely be reimbursed for what it would cost to get a laptop of the same quality and value at today’s prices. However, if you have actual cash value coverage for your contents, you would be given a percentage of the value at the time the item was covered. While it may seem more appealing to go with replacement cost coverage, the potential caveat is your premiums may be higher if you go with this option.
Also, keep in mind there’s typically a coverage limit. This refers to what your policy pays toward any claims you file. In some instances, you may be able to adjust this limit based on the value of your personal items.
Determining What’s Right for Your Personal Contents
A good place to start is by making a list of all the personal belongings in your home you wish to include in your coverage. Figure out what it would likely cost to replace everything on your list. If you could realistically absorb replacement costs minus depreciation, you might prefer actual cash value coverage for your contents to keep your premiums lower. Further ensure you get a fair replacement value for your home’s personal belongings by:
• Taking photographs of your personal belongings
• Writing down serial numbers and other identification info
• Documenting the date of purchase when it’s possible to do so
• Keeping any receipts for new items you purchase that will be part of your coverage
For reliable, affordable homeowners insurance, San Diego homeowners know they can trust Altra Insurance Services. We also provide renters, commercial, motorcycle, and auto & car insurance in Chula Vista. Their residents can receive a free quote by calling one of our friendly agents today at (619) 404-6311.