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Consider how much it would cost to replace all your belongings — every article of clothing, every piece of furniture, every dish and cup and spoon. If that’s a scary total, you’ll understand how important it is to have personal property insurance.
What is personal property insurance?
Personal property insurance is the part of a homeowners, renters or condo policy that pays to replace your belongings if they’re stolen or destroyed. This includes just about everything you own, such as:
Appliances (unless you’re a renter and your landlord owns them).
Books and music.
Cell phones, tablets and laptops.
Clothes and shoes.
Dishes and kitchen gadgets.
Although the term “personal property” is pretty broad, there are a few items that likely aren’t included. For example, a home insurance policy usually won’t cover cars or pets. If you’re a homeowner who rents out any of your space to an unrelated tenant, the tenant’s stuff won’t be covered. And if you’re a renter, your roommate’s belongings won’t be included unless your roommate is listed on your policy. (Learn more about sharing renters insurance with roommates.)
Personal property coverage is sometimes called “Coverage C,” after the heading it falls under in many insurance policies.
What does personal property insurance cover?
Personal property insurance covers your belongings if they’re stolen or if they’re damaged or destroyed in a covered event, such as a fire. Events that cause damage are known as “perils” in the insurance industry.
Named perils vs. open perils
In most cases, your belongings are covered on a “named perils” basis, which means coverage applies only for events that are specifically listed in your policy. If an event isn’t named, it’s not covered.
Below are the standard perils that most policies cover:
Fire or lightning.
Windstorm or hail.
Riot or civil commotion.
Damage caused by aircraft.
Damage caused by vehicles.
Vandalism or malicious mischief.
A falling object.
The weight of ice, snow or sleet.
Accidental discharge of water or steam from within certain household systems or appliances.
Sudden and accidental tearing apart, cracking, burning or bulging of certain household systems.
Freezing of certain household systems or appliances.
Certain sudden, accidental damage from artificially generated electric currents.
Some policies have more generous personal property coverage, known as “open perils” or “all risks” coverage. That means that if a peril isn’t specifically excluded in your policy, it’s covered.
Actual cash value vs. replacement cost
If you ever have to make a personal property claim, the amount your insurer pays out depends on which of these two coverage options you’ve chosen.
Actual cash value. Say you paid $500 for a laptop three years ago. It’s likely worth significantly less now. If that laptop is stolen and you have actual cash value coverage, your insurer will pay only the depreciated value of the computer.
Replacement cost. If you’d rather receive enough to buy a brand-new laptop, choose replacement cost coverage for your belongings. This coverage typically costs a little more, but it could be worth thousands of dollars if you lose all your stuff in a catastrophe.
Coverage outside your home
Many policies cover your belongings anywhere in the world, not just when they’re in your home. So if your suitcase is stolen at the airport or a storage unit burns down with your belongings inside, you’ll likely have some coverage — typically 10% of your total personal property limit.
» MORE: Renters insurance coverage guide
What isn’t covered by personal property insurance?
Personal property insurance generally won’t pay for damage from floods or earthquakes unless you purchase extra coverage for those disasters. If you accidentally leave your phone in a cab or drop your ring down the kitchen sink, those incidents probably won’t be covered either.
Here are a few other perils that are typically excluded:
Acts of war.
Intentional damage to your own property.
Extra personal property coverage for valuable items
Your insurance company may pay only up to a certain amount for jewelry, guns and other specified items. (In some cases, the sublimit applies to theft only.)
Below are the items that are most commonly subject to sublimits:
Items used for business purposes.
Jewelry and watches.
Money, gold and coins.
Silverware, goldware and pewterware.
Watercraft and trailers.
Say you have a total personal property limit of $100,000 but just $1,500 of coverage for jewelry theft. What should you do if your engagement ring is worth $2,000?
Depending on your insurer, you may have a couple of options to cover valuables worth more than your personal property sublimits.
Scheduled personal property
Scheduled personal property coverage lets you insure a valuable item such as an heirloom necklace or piece of fine art. These policies tend to offer broader coverage than a standard homeowners or renters insurance policy. For example, the item may be covered if you lose it. You may also be able to choose a lower deductible, or no deductible at all. An appraisal may be required.
Blanket personal property
If you’d rather not itemize and get appraisals for each of your valuable items, blanket coverage may be the way to go. This endorsement raises the coverage limit for one or more categories of stuff (such as jewelry) to encompass the full value of your collection. This coverage may also be available without a deductible.
How much personal property insurance do you need?
You need enough personal property insurance to cover the full value of all your belongings. For homeowners, insurance companies will often set your personal property coverage at a certain percentage of your dwelling coverage, such as 50% or 70%. But you may be able to customize this if you think you need more or less coverage. Renters, meanwhile, can generally choose their own personal property limit.
If you have no idea how much your stuff is worth, take a home inventory. Go room by room and evaluate what you have — particularly big-ticket items like furniture and appliances. Don’t forget to open drawers, closets and cabinets. Taking video of the process can be helpful in case you ever need to file a claim.
For a quick estimate, use our personal property calculator below.
Personal property coverage is generally subject to a deductible, which is the amount of money subtracted from your payout if you file a claim. When choosing a deductible, consider a dollar amount you’d feel comfortable paying in the case of a disaster.
How to make a personal property claim
First, consider whether it’s worth making a claim at all. If your $550 smartphone is stolen but you have a $500 deductible, a $50 payout might not be worth the effort — especially since your rate will likely go up after you make the claim.
If you do decide to file a claim, do so as soon as possible after the incident. Depending on your insurer, you may be able to file online, through an app or over the phone.
Be prepared to submit supporting documents, such as photos or video of the damage, an itemized list of what was lost or a police report in the case of theft.
Your insurance company may require you to prevent further damage. For example, if a storm blew off part of your roof, you should put a tarp over the hole to keep rain from damaging furniture and other items in the affected area. If you buy supplies for this type of mitigation, keep your receipts.
Your insurer will evaluate your claim and may send an adjuster out to your property to examine the damage. If the claim is approved, your deductible will be subtracted from any payout.
For those with replacement cost coverage, you may initially be paid only the actual cash value of your belongings until you provide proof that you’ve replaced them.