Understanding Personal Property Coverage in Homeowners Insurance: What It Covers and How It Works

What is Personal Property Coverage?

When it comes to homeowners insurance, many people are aware that it covers the structure of their home. However, it also contains a component for personal belongings known as personal property coverage.

What Does Personal Property Coverage Insure?

Personal property coverage insures the contents of your home, including furniture, appliances, electronics, clothing, and more. Certain high-value items, such as jewelry and artwork, may have limited coverage and require an endorsement.

Business vs Personal use

In homeowners insurance, personal property insurance is intended for items used for personal purposes only. If you run a business in your home, you may need separate business personal property insurance.

Understanding Coverage Limits and Valuation

The amount of personal property coverage is generally a percentage of the overall dwelling limit. However, your policy may have specific limits. It's important to understand how the value of your items is calculated, whether actual cash value or full replacement cost.

After meeting your deductible, the insurance company will help pay for losses covered under your policy. Homeowners insurance companies offer personal property insurance in different levels of coverage. When purchasing a policy, you can choose your level of coverage based on the total value of your items.

Personal Property Coverage and Limitations

Your personal property policy covers all of your belongings, wherever you keep them, with some limitations. This includes the interior of your house, yard, shed, car, garage, and even in hotels when you travel. However, your items are protected only from covered losses.

Choosing a Homeowners Insurance Policy

When selecting a homeowners insurance policy, consider whether you want an open peril policy or a named peril policy. An open peril policy covers your personal belongings from any type of accidental damages not explicitly excluded. A named peril policy is less expensive but covers only certain losses specified in your insurance policy.

Reimbursement Options: Actual Cash Value vs. Replacement Cost Value

Another factor to consider is how your insurance policy calculates reimbursement. An actual cash value (ACV) policy factors in depreciation when determining the value of your items. A replacement cost value (RCV) policy does not factor in depreciation and pays to replace damaged or destroyed items based on their current market value up to your policy limit.

Making the Best Choice for Your Family

Understanding how personal property coverage works and what it covers is crucial for homeowners looking to insure their belongings. By considering the type of policy, level of coverage, and reimbursement calculations, you can make informed decisions that fit your needs and budget.

Your Guide to Landlord Insurance

The Importance of Landlord Insurance

The idea of taking out landlord insurance may seem daunting at first, but considering the benefits, it is usually well worth the investment. While it may not be a legal requirement, having landlord insurance could help you save from catastrophic losses that may happen when managing a property, such as a tornado or fire. Without insurance, you would have to pay the entire cost of rebuilding the property if the worst were to happen. However, with landlord insurance, you would only have to pay a small deductible, and the policy can be customized to add additional coverage for other events like vandalism or theft.

Types of Rental Properties Covered

It is important to note that, while landlord insurance applies to long-term rentals over 30 days, if you plan to do short-term rentals like Airbnb or VRBO, you will need a commercial, homeshare, or vacation rental policy instead of landlord insurance. This ensures that you are adequately covered for the short-term rental nature of your business.

Now, you might be wondering, what about when you rent to family or even just a single room in your home? In both instances, you should discuss this with your agent to see what options are available for your specific situation. It’s wise to have landlord insurance, regardless of whether you are renting out to strangers or someone you know personally. You might also be able to add a home sharing endorsement on your current homeowners policy. Disclosing that you’re renting out part of your home and having a policy in place that can protect both you and your tenant in case of an accident, damage is important.

Types of Landlord Insurance Policies

When it comes to coverage, landlord insurance offers three types of policies, known as "dwelling policies." The basic DP-1 policy is a very limited coverage policy. The payment amount from this policy would be significantly less than the landlord's cost to repair the damage, and the landlord would have to make up a large difference out of pocket, but the premium will be much lower than other options. The most popular policy is DP-3, which provides comprehensive coverage, while the policy DP-2 offers moderate coverage.

Differences Between Homeowners and Landlord Insurance

There are some key differences between homeowners and landlord insurance policies. For example, while both policies cover building, liability insurance, loss of use/rental income, personal property, medical payments, and other structures, the amount of personal property coverage varies. A homeowner's policy will usually cover up to 50% of the home's insured value, while a landlord policy will often not offer any personal property coverage unless an additional premium is paid to cover appliances and furnishings. It's important to note that personal property coverage under landlord insurance does not protect the tenant's property, as they would need renters insurance for that. Additionally, the homeowner's liability covers you for personal liability that's non-business related, but landlord's liability coverage only applies to losses related to the rental. You would need separate business insurance for general liability protection.

Get Landlord Insurance with Family Union Insurance

When you’re ready to look into landlord insurance, Family Union Insurance is here to help match you with the best coverage for your specific situation. We work with many carriers that provide customizable landlord policies