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What is considered personal property?

Fact-checked with HomeInsurance.com

A comprehensive home insurance policy will include additional living expenses, dwelling, liability, other structures and personal property coverages. These coverages protect your house and your valuable personal belongings. Your homeowners policy can also help pay legal expenses if someone sues you after sustaining an injury in your home or help pay your living expenses if a covered disaster displaces you from your home. 

To understand the coverage your policy offers, you need to know how the insurance industry categorizes the different types of property you own. Learn what personal property means and what it covers.

What is property?

The law defines property as anything intangible or physical that a person or business can own. Physical property includes anything you can touch, like artwork, automobiles, tools and toys. Intangible property includes things like copyrights, patents and trademarks.

What is personal property?

Personal property includes anything you can move, which a person or entity can own. Legal documents sometimes refer to personal property as chattels, movables or moveable property. In home insurance, personal property isn’t defined by a belonging’s value. For instance, a $50 pair of jeans and a $40,000 grand piano both qualify as personal property.

Some personal property depreciates in value while other items may appreciate over time. For example, your television will depreciate every year, but your stamp collection will likely increase in value as the years go by.

Personal property can include items in a home or something attached to a home. The house itself isn’t. Your furniture is personal property, as is a flag you attach to the front of your house.

Owners of personal property can transfer ownership in numerous ways. For instance, a business can sell its used office furniture and you can give your jewelry to your child as a gift or as part of an inheritance.

What is real property?

Real property is something a person or business can own that typically cannot be moved. The law defines real property as land and anything built on the land. The banking, housing and insurance industries often refer to real property as real estate.

Real property can include your home and the lot it sits on. It also includes permanent landscaping elements like trees. Likewise, crops planted on farmland are real property. Real property also includes resources under the surface of a plot of land, such as minerals, natural gas and oil.

Like personal property, you can transfer ownership of real property to another person or entity. You can sell a piece of real estate to another family or entity or gift it to a relative. However, state and local laws usually require written documentation of real property transfers. 

Typically, you must register the transfer of real property with the government’s register of deeds or recorder’s office in the county in which the property lies. Laws require this type of transfer because real property can’t physically change hands. It requires the exchange of a deed of title.

Real property owned by a business or citizen is called private property. Governments can also own real property. Referred to as public property, real property owned by a government might include golf courses, office buildings, parks and parking garages.

What’s the difference between real property and personal property?

In a homeowners insurance policy, the insurer will separate real property and personal property coverages. A homeowners policy refers to real property coverage as dwelling coverage. For example, your policy may include $300,000 in dwelling coverage and $210,000 in personal property coverage. However, keep in mind that homeowners policies do not provide coverage for land or the lot your home sits on. Your dwelling coverage refers to coverage for the immovable structure of your home.

If a fire destroys your living room, your claim would include payouts for both dwelling coverage and personal property, minus your deductible. Damage caused to your ceiling, floor and walls would be covered by dwelling coverage, whereas replacing your couch, drapes, entertainment center and TV would be covered by your personal property coverage.

Home insurance policies also include other structures coverage, which covers structures on your property that aren’t attached to your house. Other structures can include a barn, detached garage, fence, gazebo, guest house or swimming pool. By default, insurers usually calculate other structures coverage as a percentage of your dwelling coverage, often around 10 percent,  but you can also increase your coverage limit if that would not be sufficient for your property.

If you have $300,000 in dwelling coverage, your policy would also include $30,000 in other structures coverage. Other structures coverage only covers the structure, such as a shed, but your personal property coverage will cover its contents, such as gardening tools or sports equipment.

Separating these coverages offers some advantages. If you build an extension on your home, your dwelling coverage would be increased to accommodate the additional square footage and rebuild costs if it were to be damaged due to a covered claim. And since personal property coverage is expressed as a percentage of your total dwelling coverage, your personal property coverage limit would also increase to help accommodate the furniture and belongings you may aquire to fill your new space.

A homeowners insurance policy covers losses caused by covered perils, such as fire, lightning, vandalism or windstorms. The most common homeowners policy form, an HO-3, will cover your dwelling and other structures on an open-peril basis, meaning your home is covered for any peril except those explicitly listed as exclusions in your policy, like flood or earthquake. Your personal property is covered on a named-peril basis, meaning coverage is provided for a specific list of 16 named perils, like windstorm, hail, fire, lighting, theft, vandalism, and more. If a windstorm damages your home’s roof, a pool house and patio furniture, your policy covers all losses.

Examples of personal property

Insurers base a home’s dwelling value on the cost to rebuild it if a covered peril causes a total loss. For example, a home may have a market value of $500,000 but would cost $300,000 to rebuild. The insurance company would write a homeowners policy with $300,000 in dwelling coverage.

Providers base personal property coverage on a percentage of the dwelling coverage, typically 50 percent or higher. A policy with $300,000 in dwelling coverage would typically include between $150,000 and $210,000 in personal property coverage.

Most homeowners policies set limits on certain types of personal property. For instance, State Farm’s default limits include:

  • Furs and jewelry: $2,500
  • Goldware and silverware: $2,500
  • Business property: $1,500
  • Firearms: $2,500

Most insurers allow you to increase the amount of personal property coverage for a specific type of property. For instance, if you have a jewelry collection valued at $25,000 you may be able to purchase blanket jewelry coverage. However, there may be a limit for each individual item in the collection, perhaps $1,500. If you own a diamond necklace worth $5,000, the carrier may provide you with a scheduled personal property rider that would insure a single item at its full value. Alternatively, you may choose to purchase a standalone jewelry policy.

What is considered personal property?

The term “personal property” applies to virtually all your home’s contents, regardless of their value. Personal property can include:

  • Appliances
  • Artwork
  • Cellphones
  • Clothing
  • Collectibles
  • Computers, printers and tablets
  • Curtains
  • Dishes
  • Firearms
  • Furniture
  • Kitchen utensils
  • Lamps
  • Liquor and wine
  • Rugs
  • Sports equipment
  • Stereo systems
  • Televisions
  • Toys

Things to consider with personal property

It’s important to understand the nuts and bolts of personal property coverage. First, standard homeowners policies don’t cover flood damage to your home or your personal belongings. However, you can buy flood insurance for your home and personal property through the National Flood Insurance Program, administered by FEMA.

Many standard home insurance policies don’t cover damages caused by earthquakes, either. Strong earthquakes can cause massive damage to structures and personal property. If you live in an area prone to earthquakes, talk with your insurance agent about adding earthquake coverage to your homeowners policy.

Typically, standard home insurance policies provide actual cash value coverage, which means, following a covered loss, the insurance company will pay the depreciated value of your personal belongings. Usually, the depreciated value of items such as computers and home theater systems won’t cover the cost of replacing them with new equipment at current market prices. However, many insurers also offer optional replacement cost coverage, which pays to replace your personal belongings at current prices.

Homeowners policies also cover personal items stolen from a storage unit or hotel room, usually at a limit of 10% of your personal property coverage amount, but they don’t cover lost items.

The takeaway

Personal property coverage is an essential part of your homeowners insurance.

  • Personal property coverage covers all your belongings, from appliances to wardrobes.
  • Personal property coverage covers losses caused by 16 standard named perils.
  • Insurers allow you to increase coverage for certain types of personal property.
  • Scheduled personal property coverage provides added protection for your most valuable belongings.

A homeowners policy protects your home’s structure and its contents. Insurers set personal property limits based on a percentage of your dwelling coverage, but most carriers allow you to increase coverage for specific types of belongings. You also have the option to purchase scheduled personal property coverage for your most valuable items, like collectibles, jewelry and musical instruments.

When purchasing a homeowners policy, understand the type of personal property coverage it offers. Following a covered loss, actual cash value coverage will only pay the depreciated value of your property. For maximum protection, you could purchase optional replacement cost coverage, which pays to replace your belongings at current market prices.

Michael Evans

Michael is an insurance writer for Coverage.com. He began writing professionally in the 1990s while working for the world’s first online mortgage broker, and today specializes in education, finance and retiring abroad. Michael has contributed to numerous digital and print publications, including Bankrate, Fox Business, International Living and Yahoo Finance, and is the author of Escape to Colombia, 1st Edition, a comprehensive guide to retiring to Colombia.

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