Wouldn’t it be nice if you could purchase a homeowners insurance policy and it would cover everything? Every type of loss you could suffer, from fire to flood, earthquake to tornado?
Oh wouldn’t it be nice?
Well, not really: and here’s why.
Turns out, there are certain types of property that all homeowners routinely have in their homes. Have you visited anyone lately that didn’t have any furniture? Or closets that were completely empty?
And since nearly all of us share these common items of personal property in our homes, the insurance policy is designed to provide coverage for these items. Depending on the type of policy you have, the limit of coverage for these items can be very high.
But what about items that are unique to each individual homeowner?
Well if you’re the proud owner of a $10,000 watch, a rare coin collection valued at $25,000, or fine art hangs from your beautifully decorated walls, you may want to closely examine your homeowners insurance policy.
There are several limitations in the homeowners insurance policy. While there is coverage for the contents in your home, this coverage is extremely limited for certain valuables such as jewelry, art and computer equipment.
Note. If you have a valuable collection, anything ranging from fine art to baseball cards, your homeowners policy probably won’t provide full coverage if the collection is damaged, destroyed or lost. For example, the standard policy will provide a maximum of $1,000 coverage for your jewelry if it is lost or stolen.
Tip. When you buy or renew your homeowners policy, talk to your agent about the coverage limitations for personal property. As a rule, if you have a collection or an individual item worth at least $2,500, you should discuss additional coverage options with your agent because your homeowners policy may not reimburse you fully if the collection or item is damaged or stolen.
Fortunately, you can obtain adequate coverage for your collections, your computer equipment, your art and your jewelry.
Tip. If you have a significant amount of jewelry, fine art or computer equipment, or any valuable collection, you should consider purchasing a special personal property endorsement, or “floater,” that is attached to your homeowners policy and provides the coverage you need.
With these endorsements or floaters, you provide a list of items you have. The higher the value of your items, the higher the cost to insure them. Your agent can recommend endorsements or floaters that can provide the coverage you need.
Why these limitations are actually a good thing for consumers
Admittedly, it may seem that the insurance industry is trying limit its exposure, and reduce the amount you receive for your very expensive items if they’re lost, damaged or stolen.
In contrast, these limitations exist for the benefit of all consumers.
How is that possible?
Well if every insurance policy really did cover everything you own, regardless of how expensive it may be to replace, then the cost of the policy would be drastically high: likely unaffordable for most consumers.
Think about it this way: if you don’t have a $10,000 watch, a $25,000 coin collection, or any other highly valued items, why should you pay an additional premium to insure these items?
Answer: you shouldn’t!
Which is why the insurance policy is designed to cover only the types of personal property items that are common from one homeowner to the next. Anything unique or highly valuable should be addressed on a case-by-case basis.
Which is why we strongly believe that ‘insurance is NOT one-size-fits-all.’ You deserve an insurance policy that’s as unique as your needs. You shouldn’t expect to pay a premium for coverage that you’ll never use, and you should expect your policy to be changed and amended to fit your desired coverage needs.
That’s why insurance matters, and that’s exactly what you should expect when working with a licensed insurance advisor.
If you’d like to learn more, contact one of our Licensed Advisors . We’re here to help.