Do you have enough Coverage C in your homeowners policy?
Let’s find out.
In my last column, we looked at Coverage B, “Other Structures.”
Now it’s time for Coverage C, or Personal Property Coverage. We’ll describe what it is, and then look at three mistakes you can make.
What’s covered under Personal Property Coverage (Coverage C)?
Personal Property Coverage provides insurance for almost everything you own that isn’t nailed down.
It includes big things like your sectional sofa, your king-sized bed, and your 54-inch TV. It includes small things too, like your favorite books, the stack of board games you only played once, and that Lazy Susan your kids knocked off the table and chipped- but you love too much to throw away.
It includes everyday things like your clothes and dishes, as well as not so everyday things, like your jewelry, antiques and your third-generation sterling silver flatware.
In short, if you can move it, it’s probably covered under Personal Property Coverage.
Mistake 1: Not documenting your possessions.
If I asked you to sit down over coffee and write down everything you own, could you do it? From memory? I mean everything.
Probably not. I couldn’t either.
But that’s what the insurance company is going to ask you to do after a fire.
People often miss out on money they’re entitled to because they can’t remember everything that was destroyed.
Make an inventory of all your possessions. Keep it off-premises.
A quick way to do this is a walk-through of your home while making a video on your phone. You could make separate videos for each room of the house and the garage.
Save the videos in a “cloud” account.
Mistake 2: Not carrying enough coverage.
When folks make Mistake 1, it often causes Mistake 2.
When we don’t document how much stuff we have, we don’t add up its value either. If you carry “Replacement Coverage,” you are entitled to a new pair of slacks to replace the five-year-old slacks hanging in your closet.
Have you ever added up the cost of replacing, new, all your clothing? It might shock you.
Make sure you have “Replacement Coverage.”
Then add up the costs to replace all your things. If you find that’s too overwhelming, try this shortcut.
Make a ballpark estimate of the cost of replacing the “big-ticket” items. Then double it. If that approaches or exceeds your coverage limit- call your agent.
Mistake 3: Not “scheduling” expensive items.
Homeowners policies have exclusions and limits on personal property. Lots of them.
The common limits of coverage that you’ll see are on certain expensive items, like jewelry and computer equipment, and on rare and collectible things like gun, stamp and coin collections, as well as antiques and art.
In addition to dollar limits on these types of property, the typical policy won’t cover “lost” or “accidentally damaged.”
That’s a very unpleasant surprise when someone loses a one-carat diamond from a wedding ring.
My advice: Go get your policy.
Find the section, Coverage C, Personal Property, and read it. Read it slowly and carefully, looking for limits on coverage. Also read the Exclusions section of your policy.
Most homeowners have at least one thing that should be “scheduled” as additional coverage.
There are no dumb questions when it comes to insuring your personal property. It’s taken a lifetime to acquire.
Don’t be embarrassed to ask your agent for help to make sure it’s covered properly.
We’re in the middle of what I’m calling our alphabet soup insurance series.
In my last column, we looked at Coverage A of your homeowners insurance policy. This week, we are going to talk about Coverage B... Other Structures.
What things are covered under “Other Structures?”
Coverage B covers any structure not permanently attached to your house, but still on your property. Typically, this would include:
How much is covered under “Other Structures?”
Most homeowners insurance policies cover a set percentage of the Coverage A, dwelling limit.
It works like this:
If you have $350,000 of coverage on your house, you automatically have a percentage of that for Other Structures. Typically, it’s 10 percent.
So, in that case, you would have $35,000 of coverage for other structures like your new detached two car garage, your two sheds, your split rail fence, and your pool.
That may not be enough. So, what can you do?
You can increase your Coverage B limits to make sure there’s enough protection. You and your agent should review your policy from time to time to make sure all of your structures are covered properly.
But what if you don’t have any other structures on your property, or at least none worth much money... what then?
Can you lower or delete your Coverage B and get a cheaper rate? Usually not.
Homeowners policies use a formula for Coverage B and Coverage C (which we’ll talk about in my next column). That formula automatically includes a minimum percentage of the primary dwelling coverage limit. You don’t get a price break by asking for less than the minimum.
Think of it like a fast-food burger.
The burger comes with pickles, mayonnaise, lettuce, and mustard. You don’t like any of them. The burger joint is happy to make sure those ingredients aren’t on your burger. But you’re still going to pay the same price.
What’s not covered under “Other Structures?”
Your “stuff” isn’t normally covered. If you store your old stereo equipment in the garage, that’s not covered under “Other Structures” coverage. You have Coverage C, Personal Property coverage for that.
Neither is someone else’s stuff... especially if you are renting out your garage for money (that creates a whole other coverage problem- make sure you tell your agent if you do that).
Neither is your car (you have auto insurance for that).
And nothing is covered if you’re running a business out of your other structure. Just ask “Paul the Plumber.” (Yes, he’s fictional.)
Paul doesn’t really remember when it happened. But he woke up one day and realized that he couldn’t park his car in his two-stall garage at home anymore. His overcrowded plumbing shop had spilled into his home garage over the last year.
His detached garage had become, quite accidentally, Paul’s Plumbing- Second Location. It just wasn’t one he listed on his business card.
One day, Paul’s detached garage burned to the ground. And he found out he wasn’t covered. At all.
Call your local agent and discuss “Other Structures” with them. Make a cup of coffee and plan on 15 minutes.
Run through all of your other structures with them, and what they are used for. It could make a critical difference at claim time.