Personal Property Insurance
Margaret Huntley 10-12-2021

Everything You Need to Know About Personal Property Insurance

Personal Property Insurance

Personal property insurance refers to the section of your homeowners or renters insurance policy that provides coverage for your personal belongings. In most homeowners policies, Coverage C is the section that addresses personal property coverage. 

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Personal Property

Your personal property includes all of your belongings within your home. This includes electronics, appliances, furniture, and so much more.

It’s actually faster to name the items that would not be considered personal property by your insurer. The following are not covered under personal property insurance:

  • Motorized vehicles 
  • Animals 
  • Items that belong to your landlord 
  • Stuff that flies or hovers

Pretty much everything else that you own, is your personal property. 

What Personal Property Insurance Covers?

There are two types of personal property insurance policies that offer different amounts of coverage. 

  • Named Peril Personal Property Coverage: is the most common coverage in standard homeowners insurance policies. Your belongings are covered in the 16 named perils on the policy, which are as follows:
    1. Fire or lightning
    2. Theft 
    3. Windstorm or hail 
    4. Explosion 
    5. Riot or civil commotion 
    6. Aircraft
    7. Vehicles 
    8. Smoke damage 
    9. Vandalism or other malicious mischiefs 
    10. Falling objects 
    11. Weight of snow, ice, or sleet 
    12. Accidental discharge or overflow of water 
    13. Sudden accidental damage to water heater or HVAC 
    14. Freezing 
    15. Power surges 
    16. Volcanic eruption
  • Open Peril Personal Property Coverage: offers more comprehensive coverage than the standard named peril coverage. With this policy your personal property is covered in all events except for the following 10:
    1. Earthquakes 
    2. Flood damage 
    3. Mold 
    4. Cracking foundation due to tree roots 
    5. Natural settling, cracking, shrinking, or expanding of the foundation 
    6. Faulty construction 
    7. Corrosion 
    8. Pests such as insects, vermin, or rodents 
    9. Intentional damage 
    10. General wear and tear

When any damage to or loss of your personal belongings occurs in a covered peril you can file a claim with your insurance provider. 

This applies to your property whether it was damaged in your home or outside of it. That means that if you have jewellery stolen from a hotel room, you are still covered. 

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Limit of Liability in Personal Property Insurance

In all personal property insurance policies, your insurance pays for a replacement or repairs to your belongings up to a limit of liability. This limit of liability is a fixed amount that your insurer will pay for a single loss. The declarations page of your homeowners or renters insurance policy will tell you what the limit of liability is in each of your policies. 

Most often, the limit of liability is 50% of your dwelling coverage. So, if your home is insured for $400 000, then your limit of liability would cover up to $200 000 worth. 

Every policy is different, as are everyone’s individual insurance needs. The amount of coverage that you need will depend on what your personal belongings are and the amount of coverage offered will depend on your provider and your policy. 

How Personal Property Insurance Claims are Paid Out?

There are two ways that your insurance provider may issue payment for your claims on personal property. They are:

  1. Actual Cash Value: The insurance provider takes the replacement cost of your belongings and deducts any depreciation of its value caused by age, condition, etc. For example, if you bought a $5 000 television ten years ago, you won’t be receiving the full amount because it is no longer worth that much.
  2. Replacement Cost: This type is less common than the previous one, as it pays the full replacement value of your belongings. There are no deductions due to depreciation.

It is also important to note that certain high theft items have limits on how much an insurance company can pay to replace them. They included (but are not limited to):

  • Guns 
  • Jewellery 
  • Money 
  • Watercrafts

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Increasing Personal Property Insurance

If you wish to purchase more personal property insurance coverage you can speak to your insurance provider about either an enhanced policy or a scheduled property endorsement. An enhanced policy raises the liability limits, while a scheduled property endorsement allows you to increase coverage on specific items.  

Margaret HuntleyMargaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.