How much personal property coverage do you need?

What personal property coverage is

Personal property coverage pays for your belongings: furniture, clothes, electronics, kitchen things, tools, and everything else you would take with you if you moved. On a homeowners policy it is often called Coverage C. On a renters policy it is most of what you are buying.

The limit is the most the insurer will pay for all of your belongings together. If a fire destroys everything and it would cost more than the limit to replace, you cover the difference.

How insurers set the default

On many homeowners policies, the personal property limit starts as a percentage of the dwelling limit, the amount the house itself is insured for. Figures around 50% to 70% are common. Nobody counted your belongings to arrive at it, so it can be far too high or far too low for your household.

Renters policies work the other way around: you choose the amount, usually from a few set options, and many people pick the lowest without checking.

Your declarations page, the summary at the front of your policy, shows the limit you have now. Check whether it says replacement cost or actual cash value, because that decides whether the limit is measured against new prices or used ones.

How to estimate what your belongings are worth

Walk through your home one room at a time and estimate what it would cost to buy everything in it again, new, today. Round numbers are fine. The point is a total you can compare with your limit, not an inventory to the dollar.

Most people underestimate. The big items are easy to remember, but a kitchen alone holds hundreds of things, and clothing for a family often costs more to replace than the furniture. If your total lands near your limit, assume you have missed something and treat it as too low.

Replacement cost or actual cash value?

The limit is only half the question. A policy that pays actual cash value takes off depreciation for age and wear, so a $90,000 household of things a few years old might be valued at well under that. A policy that pays replacement cost gets you to today's prices, usually in two payments. Our guide to actual cash value vs replacement cost shows the difference on a real item.

Watch the category limits

Even a high overall limit has sublimits inside it: lower caps on particular kinds of property. They are listed on your policy and commonly cover:

• Jewelry and watches, often only for theft.
• Cash, gift cards and collectible coins.
• Firearms.
• Silverware and other precious metals.
• Business equipment kept at home.

If you own more in one of these categories than its cap, ask your agent about listing those items separately on the policy. It costs a little more and usually covers them for their appraised value.

When to raise your coverage

• Your estimate comes close to your limit, or over it.
• You have bought a lot recently: new furniture, a renovation, a wedding, a new baby.
• You work from home and keep equipment there.
• Your limit was set years ago and never revisited. Prices have risen since.

Raising the personal property limit is usually one of the cheaper changes you can make to a policy, but the cost depends on your insurer and your home. Ask your agent for the price of a few different limits before you decide.

How often should you check it?

Once a year is a good habit, when your policy renews and the insurer sends new documents. Check again after anything that changes what you own in a big way: moving house, combining two households, a renovation, or a run of large purchases.

Keep the estimate somewhere you can find it after a loss, not only on a computer in the house. If you ever have to claim, the same room-by-room list becomes the start of the inventory your insurer will ask for.

Your deductible still applies

Whatever your limit, the deductible comes off a claim first. A higher deductible lowers your premium but means you pay more of any loss yourself, and on a small claim it can mean the insurer pays nothing at all.

Where Indemnia helps

Indemnia builds an inventory of what you own from the receipts in your email and the photos you take of each room, with today's price on every item. It compares the total against your policy limit and shows where you would fall short, so you can fix it before a claim rather than find out during one.