When people purchase an insurance policy for their home, most of their concerns center around making sure the policy covers their house adequately. But, few homeowners think twice about the part of the policy that protects their personal property.
A standard homeowner’s insurance policy (form HO-3) will typically cover your property such as clothes, TV, washer, dryer, tools and furniture for its actual cash value. But you can also choose to have replacement cost coverage on your policy. Replacement cost coverage could be worth hundreds, even thousands of dollars to your family in the event your property is destroyed by a situation that is covered by your insurance policy.
By now you are probably asking yourself, “What is the difference between the replacement cost coverage and the actual cash value of my property?”
Actual cash value is replacement cost minus any reasonable depreciation. For example, a television set usually lasts about 10 years. If you own a TV for 5 years, about half of its life is used up. While you would pay $800 to replace it with a new one, its actual cash value is only around $400.
If you have replacement cost coverage on your policy, then your television would be replaced with another television that is like kind and quality. Replacement cost coverage sounds like a good deal, right? Well, it is!
The next thing I want you to think about is whether or not you truly know how much your personal belongings are worth. I would encourage you to walk around your house, room by room and do an inventory. There are several ways to do the inventory. You could write each item and its estimated value in a notebook, take photos or shoot a video. Store your inventory in a safe place away from your home, such as a safety deposit box. Also, when you make a significant purchase, keep the receipt and add the item to your inventory while it’s fresh in your mind. If you have a large claim as a result of a disaster like a fire or tornado, the inventory that you have prepared will come in very handy.
In the event you have a catastrophe like a fire or tornado at your home, the last thing you want to think about is how you’re going to replace all of your personal property. By taking a few extra steps now, you could save yourself not only money but also heart ache and a lot of stress.
If you have questions about your personal property coverage, please call our office at 353-2800 or stop in for a visit.