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Personal property coverage in a homeowners insurance policy, or Coverage C, can protect your belongings in the event of a covered peril like a fire or theft.

Here’s what you need to know about personal property replacement cost coverage:

What is replacement cost coverage on personal property?

Personal property replacement cost coverage is the part of a home insurance policy that pays to repair or replace your personal belongings if a covered event — like a heavy windstorm, fire, or flood — damages or destroys them.

With this type of coverage, your home insurance carrier will reimburse you for the cost of a new item of similar value. Replacement cost coverage doesn’t account for depreciation. No matter when you purchased the belonging, or how much use you got out of it before it was damaged or destroyed, you can get enough money to purchase a new one.

Let’s say you bought a couch five years ago for $3,000, and a fire strikes, causing it to go up in flames. If you have personal property replacement cost coverage, your insurance provider will reimburse you for what it costs to replace your couch, which is likely more than $3,000 today, minus your deductible (the amount you pay out of pocket for a covered claim).

If you need to protect your home and belongings with homeowners insurance, Credible can help. You get quotes from multiple insurers to find a policy that fits your needs.

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Learn More: How Much Does Homeowners Insurance Cost?

Other coverage levels for personal property

Replacement cost isn’t the only type of coverage you can get for personal property. You can also choose one of the following policy types:

  • Actual cash value: Actual cash value (ACV) considers the value of your assets at the time of the loss. The payout accounts for depreciation. This means the amount you get from your insurer may or may not pay for the full cost to repair or replace an item. Since most items lose value over time, ACV is often less than what you originally paid. If you purchased a kitchen table for $1,000 several years ago but it’s only worth $700 today, your insurance provider will reimburse you $700.
  • Extended replacement cost: Extended replacement cost helps cover higher rebuilding costs that are outside your control. If your home faces damage after a major disaster and the cost to repair or rebuild it exceeds your dwelling coverage, this add-on, or rider, can increase your dwelling coverage limit by an additional 10% to 50%. It also raises your personal property limit, since personal property coverage is typically 50% of your dwelling coverage in a standard home insurance policy.
  • Guaranteed replacement cost: Guaranteed replacement cost offers coverage for the full cost to replace your home, even if the amount exceeds your policy limits. It’s an extension of standard replacement cost insurance, which will pay for the materials to rebuild your home up to a set limit.
Keep in mind: Generally, the more coverage you purchase, the higher your premium will be. For example, if you opt for guaranteed replacement cost coverage, your premium will be more than if you simply choose actual cash value coverage.

Check Out: What Is Extended Replacement Cost?

What does personal property insurance cover?

Personal property insurance can cover a variety of belongings. Personal property is typically anything you bring into your home, rather than fixtures that were already installed when you purchased it.

What does personal property coverage exclude?

Personal property insurance doesn’t cover everything you own. It usually excludes the following:

  • Cars
  • Pets
  • Items you rent to someone else
  • Credit cards

Fortunately, you can buy other types of insurance to protect these valuables. If you own a vehicle, car insurance is not only a smart investment, but also required in most states. Pet insurance is worthwhile if you have a pet.

Good to know: If a peril that isn’t covered under a standard homeowners insurance policy (like a flood or earthquake) causes damage to your personal property, your insurer won’t reimburse you for it. It’s a good idea to check your insurance policy so you know exactly which perils your insurance covers.

How to calculate the replacement cost of personal property

While an insurance agent can help you calculate the replacement cost of your personal property, you can also estimate it yourself before choosing a policy. If you go the DIY route, follow these steps:

  1. Create an inventory of your belongings. Go through each room in your house and make a list of all your personal property. Don’t forget to exclude your car, pet, or anything else that your personal property insurance policy doesn’t cover. Once you have a list of the covered items, take photos or videos of them to keep as documentation. It’s also a good idea to record a description of each as well as any applicable model numbers and serial numbers.
  2. Figure out the value of your items. Note how much each item would cost to buy. You may have to do some online research to do so. If you have multiple items in one category, like small appliances, you may want to come up with a value that captures all of them. Add up these numbers to get the total value of all your belongings.
  3. Keep your list in a safe place. Consider creating a digital version of your list so that you can easily access it after a natural disaster or other covered event.
Tip: You can also hire a professional appraiser or contractor to get a more accurate idea of your belongings’ replacement cost.

How much personal property coverage do I need?

You need enough insurance coverage to cover the full value of your personal belongings. Insurance carriers will typically set your personal property coverage at a certain percentage of your dwelling coverage, usually between 50% and 70%, but this might not be enough coverage for you.

Consider adding $10,000 on top of your total estimated replacement cost per family member in your home as a cushion. Remember that personal property coverage usually comes with a deductible, so choose a dollar amount you feel comfortable paying in the event of a disaster.

Learn More: What is Guaranteed Replacement Cost?

Replacement cost coverage limits on personal property

Like other homeowners insurance coverages, your personal property coverage has a limit. If you surpass the reimbursement limit your insurer set, you’ll be on the hook for the difference. Let’s say you have $20,000 worth of furniture stolen: If you only have a $15,000 coverage limit, you’ll be out $5,000.

In addition, home insurance policies generally have sub-limits on costly items, like fine art or jewelry. For full protection, you may want to schedule these expensive items (buy extra coverage for them).

What is scheduled personal property?

If you own some expensive items, scheduled personal property coverage can give you extra peace of mind. This adds more coverage to your standard homeowners insurance policy. Though it usually leads to higher premiums, it offers more protection, including additional perils.

A scheduled personal property add-on is worth considering if you want to protect any of these high-value belongings:

  • Jewelry
  • Artwork
  • Antiques
  • Musical instruments
  • Collectibles
  • Firearms
  • Cameras
  • Laptops
Good to know: You may be able to opt for a lower deductible or no deductible for scheduled belongings. Just be sure to ask your insurer if you can do so.

Why you should consider replacement cost coverage on personal property

You’ve worked hard for everything you have. That’s why replacement cost coverage on your personal property can be a wise investment. It can provide you with the funds you need to repair or replace an item after a covered loss with no deduction for depreciation. With personal property replacement cost coverage, you won’t have to worry about paying more than your deductible to cover the damage.


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Keep Reading: How to Change Homeowners Insurance

Disclaimer: All insurance-related services are offered through Young Alfred.

About the author
Anna Baluch
Anna Baluch

Anna Baluch is a personal finance freelance writer with years of experience writing for well-known media outlets in the business and personal finance space. Her work can be found on media outlets like The Balance, Freedom Debt Relief, LendingTree, Credit Karma, Nav, and RateGenius. She holds a bachelor’s degree in marketing from Northwood University and an MBA from Roosevelt University.

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