What is Home Contents Insurance?

What is Home Contents Insurance?

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Home contents insurance (or personal property insurance) covers the cost of replacing belongings in your home when they're damaged or stolen. In the US, home contents coverage is usually included as part of your homeowners or renters insurance policy, but standalone contents insurance is available in other countries like the UK and Australia.

Who and what does home contents insurance cover?

Home contents insurance provides coverage against the loss of your in-home property to damage or theft. This usually doesn't include property that's already insured under its own policy, such as a car. Most homeowners insurance policies also cover the personal property of your guests and live-in employees, but not the property of long-term tenants who aren't related to you.

Here's a list of items that we found were covered by "standard" sample policies in the US. Because these aren't legally standardized, your own covered categories and limits may differ in ways that you'll have to confirm by examining your policy. Contents coverage can also change depending on who owns the property and where it's located—more on this below.

Home Contents Insurance Usually Covers…
But Often Doesn't Cover…
  • Jewelry and precious metals
  • Electronics like mobile phones
  • Firearms and ammunition
  • Property of guests and live-in employees
  • Boilers, carpeting and other fixtures
  • Animals, birds, or fish
  • Motor vehicles requiring registration for public road use
  • Property of non-family roomers, boarders, and tenants
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If you're a homeowner, other parts of your homeowner's insurance policy probably cover many items that your contents insurance doesn't. This includes coverage for carpeting, boilers, and appliances like washing machines. If you rent, your landlord's homeowner coverage should apply to these items. As always, be sure to confirm the details of your own policy.

Does contents insurance depend on where you keep your things?

Most homeowners insurance policies offer at least some personal property coverage anywhere in the world, including when you travel. However, your coverage limit is often much lower for belongings that aren't in your home. For example, the Insurance Information Institute's industry-standard sample policy states that property "usually located" at a different residence is limited to 10% of the coverage for belongings in your insured home.

Fortunately, the same sample policy provides a consistent amount of coverage as long as your belongings are located on the premises of the insured home. For instance, tools in a detached garage or shed are covered the same as if they were in your basement. However, landlords face lower coverage limits on furnishings and other property that they place in a tenant's rented space.

What are the coverage limits of home contents insurance?

As a rule of thumb, homeowners insurance tends to cover your personal property at a value ranging from 50% to 70% of the insurance value on the structure. For instance, if you own a home that's insured for $500,000 of dwelling coverage, your contents coverage would likely fall between $250,000 and $350,000.

With renters insurance, you're allowed to choose a coverage limit when starting your policy. This allows you to pay for just enough coverage to account for the total value of your possessions. However, your maximum coverage can be affected later on by two things: your policy's method of calculating value and the inclusion of sublimits on specific categories of property.

Actual cash value vs. replacement cost value

Home content insurance generally covers you for the actual cash value (ACV) of your belongings. An item's actual cash value equals its original purchase price minus any loss of value from wear and tear over time. Unless you lose something on the same day you buy it, an ACV policy will always pay out a smaller sum than what you spent at purchase.

If you prefer to insure your things for their full original value, consider a more expensive replacement cost value (RCV) policy instead. With an RCV policy, you receive a payment reflecting the price you paid for the object—in other words, the cost of replacing it with a brand new version. You'll need to decide whether the higher premiums of an RCV policy are worth the improved coverage.

Sublimits on valuable items

Most contents insurance policies also come with sublimits—sometimes called special limits—for especially valuable types of property such as jewelry or fine art. When you file claims for such items, the policy will only compensate you up to the sublimit for the related category. In addition, some sublimits also include a lower per-item limit. Below, we compared sublimits found in three sample homeowner policies.

Allstate
Farmers
State Farm
Money and coins$100$200$200
Tickets, checks, deeds$500$1,500$1,000
Watercraft$500$3,000$1,000
Stolen jewelry and furs$500$5,000 (max $1,000 per item)covered separately
Silverware and goldware$500 (if stolen)$3,000$2,500
Trading cards$1,000 (max $250 per card)$2,500 (max $200 per card)$2,500
Stolen firearms$1,000$3,000$2,500
Digital equipment$3,000$5,000$5,000
Stolen rugs$10,000 (max $2,500 per item)$10,000 (max $5,000 per item)$10,000 (max $5,000 per item)
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You may have noticed that some of the sublimits above apply specifically to stolen goods. This means that the sublimit doesn't apply to property that's lost in some other event that's covered by your policy. For instance, firearms destroyed in a fire would be covered for their full value—so long as that amount doesn't exceed the overall limit on your personal property coverage.

There are also instances where an insurer's standard contents insurance policy won't cover certain objects at all, such as State Farm's sample policy on jewelry and furs. You may be able to add on coverage for specific items as needed, but adding that optional coverage will raise your premiums.

How much contents insurance coverage do you need?

The amount of coverage you need is determined by the total value of the possessions you want to cover. Putting together an inventory of all your belongings is the logical first step in getting the right policy. Most people underestimate how much their personal property is worth in total, but this makes sense given that you're tallying up years of purchases.

In the past, the best way to take inventory was with pen and paper, photos, and receipts. Nowadays, there are mobile apps from both insurers and independent companies that help you create your inventory more quickly. While it's always better to include any detail you can about item prices and serial numbers, even the simple act of photographing your things can prove useful in a claim.

How can I get home contents insurance?

If you're a homeowner in the US, you probably have home contents insurance already. Typical homeowners insurance policies cover the contents of your home as well as the structure itself. If you own a condo, your insurance policy may be "floor-to-ceiling" in that it includes coverage for the interior as well as for your movable goods.

If you're a renter, you most likely need to get a renters insurance policy if you want your belongings to be insured. Unless you're related to your landlord, their homeowner's contents coverage will not extend to your property in their home. Given that the average renters insurance quote in the US is only $187 annually, picking up a policy is usually a good idea.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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