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10 Things Your Homeowners Insurance Isn’t Covering Enough

Fact-checked with HomeInsurance.com

They say the best things come in small packages. But as many learn too late, it’s the smallest things and most valuable things that will end up being lost, damaged, or destroyed – and are more likely to be grossly underinsured on homeowners insurance.

Before you find out the hard way, here’s a list of the most common types of personal property that need more coverage than what’s provided on a standard homeowners insurance policy, how much coverage you have, and what extra coverage you probably need.

What makes an item not covered fully

Every homeowners insurance policy defines which items are covered and to what extent. While policy exclusions prevent some items from being covered entirely, like certain dog breeds and damage caused by pests, others are only covered up to a certain limit that may or may not cover their full value.

For example, let’s say you recently purchased a high-end laptop for $2K, but your home insurance policy has a $1K limit on electronics. If your home is burglarized and the laptop is stolen, you’ll only receive the maximum $1K payout to compensate for the loss.

Of course, this assumes that the reason the item goes missing or is damaged is covered under the policy. If you left the laptop at a café and weren’t able to get it back, the loss wouldn’t be covered, and any claim would be denied.

Differences between replacement cost and actual cash value

What do cars and diamond rings have in common? In addition to costing a small fortune, both depreciate significantly the moment you purchase them. 

The value of a car drops by around 11 percent as soon as you drive it off the lot, and if you tried to sell your engagement ring, you’d probably only get around one third to one half what you originally paid for it.

This is where it’s important to know the difference between replacement cost and actual cash value in your home insurance policy. Many policies only cover the actual cash value, which often doesn’t come close to what it would cost to replace your prized possession. 

If a $6K ring is stolen and your homeowners insurance company will only cover the actual cash value, you could be left with a measly $2K to $3K check in your mailbox.

Items that are not covered enough

1. Electronics

The average home now has more TVs than people, and it’s possible your standard insurance policy won’t cover them, much less the rest of the electronics in your house. Twenty years ago, a $1K policy limit on electronics may have covered everything, but today, it won’t even come close in the event of a major disaster.

2. Jewelry

Diamonds may be a girl’s best friend, but when diamonds go missing, insurance is your best friend — or your worst enemy if you don’t have enough coverage. The standard per-theft dollar limit is $1,000 for an entire claim, not per item. If you lose a stone, you’re not covered at all.

3. Musical instruments

Although there aren’t policy limits on musical instruments, there are still coverage gaps. Average homeowner policies don’t cover damage or breakage, and there’s not any coverage if the musical instrument is taken outside the home. 

The average household is less likely to have to worry about this, but musical instruments usually aren’t cheap. If you have an antique instrument, like an 18th century French violin, you should get it appraised.

4. Guns

A basic homeowner policy has a coverage limit of $2K to $3K for guns, so if you have a few for recreational use, this may be sufficient. For some people, guns are a hobby, and big gun collections can mean big claims — that are denied if you don’t have enough coverage. Given recent reports of people buying up guns in a hurry in various retailers across the country, a lot of people are probably sitting on a lot of guns without much insurance at all.

5. Furs

As high-value luxury items, furs are normally included in jewelry policy limits. If you’re unfortunate enough to have both your jewelry and furs taken, remember you can only claim up to $1K collectively. That payout would barely be worth the time it took to make the claim when there’s no telling how much you’d lose if furs and jewelry were both stolen.

6. Artwork and antiques

Some art carries a value that is purely sentimental, but if well-known artists grace the walls of your home, you can and need to get more coverage. Basic homeowner policies don’t even come close to providing enough protection for the average art collector or small-time enthusiast. To avoid this, buy special coverage for your artwork.

7. Coins and money

Avid coin collectors may be upset to learn that most homeowner insurance policies only have a $200 coverage limit on money. Unlike the everyday dollar bills we use, coin collections usually appreciate in value as time goes on. 

If you have some bad luck, your coin and money collection is stolen, and your insurer barely covers the cost of the box you kept them in, it’s not because you stepped on a coin tails up. It will be because you simply didn’t seek out and purchase extra coverage. Don’t forget to have them appraised annually to ensure you’re buying a sufficient amount of coverage.

8. Stamps and valuable papers

A typical policy limit on important papers is $1,000, but normally it’s not the piece of paper that holds the value — it’s the information on the paper. Things like stamp collections can be insured for a higher amount, but keep passports and tickets in a safety deposit box.

9. Cards and comics

When it comes to collections, it can be hard to prove value, and many homeowner policies only provide standard coverage. If you can prove authenticity and condition, you may get more money from your claim, but if you can’t name the value of each card or comic, you’ll likely have to sit this one out. It may be a homerun for the thief with your collection, but it’s multiple, major strike-outs for you.

10. Silver and gold

Most homeowner policies have a limit ranging anywhere from $2,500 to $5,000 for silver, gold, and pewter, including dinnerware, silverware, and anything else containing the metal. If your valuable pieces are only plated in expensive metals, this limit will suffice, but if you have solid pieces, you probably need more protection.

Why these items are not covered fully

Items not covered fully vary depending on the insurance company. They’re usually categorized as high-value possessions that are frequently targeted by thieves, such as jewelry and watches. 

Limiting coverage offers homeowners insurance companies a way to mitigate the risk associated with insuring them. Without these limits, home insurers might struggle to pay out claims if too many high-value items were stolen.

How to get the coverage you need

There are some steps to take to make sure your more expensive items will have the coverage you need:

  • Create a home inventory: Once you have a list of all the possessions in your home and their value, you’ll be in a better spot to evaluate whether you need more coverage.
  • Look at your existing policy: How much coverage is offered for the items on your list? Are certain items, such as jewelry or collectibles, only covered up to a limit?
  • Compare your policy terms to your home inventory: If the value of certain items far exceeds the payout you’d get in the event of damage or theft, you’ll need to extend coverage to protect them.
  • Talk to your home insurer: Ask about the cost of adding riders (often called “endorsements” or “floaters”) for the specific items you’re concerned about.
  • Get quotes from additional insurance companies: Get several quotes to see if you can get a better deal on the coverage you need elsewhere. For example, Chubb offers floater policies for jewelry, collectibles, art and even wine collections.

Taking these steps can let you know if you need to adjust your policy. 

How to protect your personal belongings

You may just now realize how vulnerable you are to policy gaps, but this can be easily fixed.

Add endorsements

One of the most common methods of adding coverage to your personal belongings is to add endorsements. Scheduling personal property is one of the best ways to protect your valuable items by adding dollar limit coverage and extending cause of loss circumstances. It does require some leg work on your part, and you’ll be required to make an extensive inventory of all your valuable items.

While tedious, doing this ensures you have the best coverage possible. You won’t have a deductible, and claim settlements are easier. The only disadvantage could be if your belongings gain value annually, like expensive artwork does. You’d have to get an appraisal annually, which can seem nearly impossible to do and likely won’t be a time you look forward to, but it’s imperative. 

How imperative it is depends on the belongings, their worth, and if you regularly add to a collection. If you have something that appreciates as a general rule, it’s worth the extra time. Remember too that whenever adding to a collection, that item has its own value and often changes the value of your entire collection, most likely increasing the collection’s value.

Buy special perils coverage

Another strategy for covering mid-range value items, like electronics, is to buy special perils coverage. This covers theft and accidents that cause damage or destroy your personal belongings.

It doesn’t cover everything, however. Similar to the way homeowners insurance won’t pay for structural flood damage, it won’t pay for contents damaged or destroyed by floods either. If you’re in a high-risk zone and have a mortgage from a federally regulated or insured lender, you’re required to carry flood coverage. 

However, flood insurance, a federally-run insurance policy only available from the National Flood Insurance Program (NFIP), doesn’t cover personal belongings/contents. However, NFIP offers a second flood insurance policy solely for contents with $100K limits, the only way to insure contents against flood. 

Flood insurance isn’t as pricey as you may think and can be priceless in flood losses. For $100K in building coverage and $40K in contents coverage, premiums start at $274 a year. Whether in a high-risk flood zone or not, suffering huge losses because of failure to know policy limits is frustrating enough. Imagine the frustration upon discovering you have absolutely no coverage for contents destroyed or damaged by flood.

Talk to your provider

We value the roof over our head, but in some cases, it’s what’s under our roof that can mean the most, as well as possibly carry a higher value (relatively speaking) than our home. Even minimalists hold on to certain items that have intrinsic value. 

For families who own property of any kind that’s worth a lot of money, it’s relatively inexpensive to obtain sufficient coverage by some means. That extra coverage is worth every penny — just as long as it’s not a penny from your coin collection. Talk to your provider about options if you’re still worried about not having sufficient coverage.

Invest in home protection

There are even more ways to keep your belongings safe alongside an insurance policy. Home monitoring systems are a great way to keep an eye on things while you’re not at home (and they might even earn you a discount on your home insurance). 

For small items like jewelry and watches, consider purchasing a safe to further deter thieves from trying to snatch your most expensive belongings.

The takeaway

  • Certain high-value items are only covered up to a certain dollar value under standard homeowners insurance policies.
  • While every homeowners insurance company limits coverage for different items, the most common culprits are jewelry, electronics, and collectibles.
  • If you own items that exceed the limits of your current home insurance policy, you’ll need additional coverage – often called an endorsement or floater policy – to make sure they’re insured.

Conclusion

Insurance policies might not cover everything automatically. Examine your policy to make sure you have the coverage you need.

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