You’re a diligent and responsible homeowner or renter, always ensuring your insurance policy is current and your payments are made on time. However, did you know that some of your possessions might have limitations to their coverage?
Let’s test your insurance knowledge. Which of the following situations is 100% covered by a standard insurance policy?
- Several items from an inherited set of Tiffany silverware have gone missing after a party.
- You forget your Rolex® in a hotel room.
- A hot water heater bursts and floods the basement, destroying a 1986-1987 Fleer Michael Jordan Rookie Card.
- None of the above.
The correct answer is “D”, but why?
Homeowners insurance is designed to help protect against unanticipated losses caused by fires, thefts and other disasters, however, it doesn’t cover accidental losses like mysterious disappearances (“b”). Additionally, expensive things that are easily stolen (“a”) or valuable, and difficult to replace items (“c”) may be subject to sub-limits, which is the maximum amount an insurer will pay as specified by the policy.
To avoid falling victim to insufficient coverage, I recommend taking the following three steps:
Create and maintain an inventory. Take photos or videos, provide descriptions, document the purchase date and price, serial numbers and keep copies of receipts when possible. The initial process of building an inventory may be tedious, but the end result will prove invaluable in the unfortunate event of an unexpected loss. Consider creating your inventory on a phone application. This could be accessed at any time or anywhere the need arises.
Consult with your agent. Most insurers offer additional personal property insurance to cover expensive and/or irreplaceable belongings. Your agent will tell you what you will need to provide to document each item. In some case appraisals are needed. This requirement varies per policy.
Additional items that may not be fully covered by a standard policy include fine art, rare stamps or coins, wine collections, antiques, expensive jewelry and collectibles. Insuring these items to full value is inexpensive and you should schedule a review of coverage with your agent.