Insurance

How Your Homeowners' or Renters' Insurance Policy Provides Coverage for Personal Property

Reviewed by Ilona Bray, J.D., University of Washington Law School
Lost your diamond ring? Came home to find vandals had run a hose through your window? Learn about whether your insurance might cover such damage.

Whether you own a home or rent, your homeowners' or renters' insurance policy will cover losses to personal property that you or your family own or use, in some cases even if it is located outside your home.

However, the scope of coverage and the amount that the insurer will pay on a claim for damage or loss depends on various factors, as summarized here. You will want to read your insurance policy for the details.

How an Insurance Policy Defines Personal Property

In insurance terms, personal property, also known as chattel or personalty, is any property that is not attached to real estate or to buildings or structures on real estate.

Broadly speaking, the personal property that is covered in your homeowners' or renters' policy consists of the contents of your home or apartment and your personal belongings, such as clothing. The policies cover most personal property that you keep elsewhere (such as in a storage unit), and may, to a limited degree, cover your child’s belongings in a dorm room.. You'll commonly find details in a section of your policy titled "Coverage C."

Examples of the types of personal property that is normally covered in a homeowner's or renter's policy include:

  • furniture
  • appliances
  • television sets, computers and other electronic equipment
  • clothing, linens, and drapes
  • utensils, dinnerware, and cookware
  • tools
  • sports equipment
  • watches, jewelry, and other valuables, and
  • collectables and fine art.

People who have a large amount of jewelry, art, and other valuables often buy additional coverage, because the basic policy limits will not fully compensate them in the event of damage or a loss, as explained below.

Personal property not covered in a typical homeowners' or renters' policy includes:

  • animals or birds
  • automobiles, recreational vehicles, boats, and trucks
  • if you are a landlord, the personal property of your tenant
  • if you are a renter, the personal property of your landlord, and
  • any business property or inventory (if, for example, you run a home business, you are expected to obtain separate insurance for this).

What Types of Perils or Losses You Can Make Claims For

Personal property is typically insured against losses caused by the following types of perils or risks:

  • fire or lightning
  • sudden and accidental damage from smoke
  • windstorm, hurricane, or hail
  • explosion
  • aircraft or vehicles
  • vandalism or malicious mischief
  • riot or civil commotion
  • collapse of building or any part of a building
  • accidental discharge or overflow of water or steam from appliance, plumbing system, or heating/air conditioning system, including resulting mold (though mold caused by the owner’s or renter’s neglect will typically NOT be covered)
  • falling objects
  • freezing of household appliances, and
  • theft.

Your homeowner’s or renter’s policy will not, however, cover loss or damage due to war or nuclear incidents. Terrorism is not usually named as either a covered peril or an exclusion, and thus remains somewhat of an open question—but explosion, fire, falling objects, and smoke damage are covered, and these are the most likely results of terrorist acts.

In addition, damage or loss due to earthquake won’t be covered absent a special policy, or rider; and floods are similarly excluded (the federal government offers flood insurance through its Federal Emergency Management Agency, FEMA).

How Much Your Policy Will Pay Out (Coverage Limitations)

The coverage limit for damage to personal property is stated in your policy. For example, the policy might pay up to $25,000 on any one claim in one year. If you're a homeowner, the limit for personal property (called your home’s “contents”) might be calculated as a percentage of the policy limit for the home itself (often 70% to 80%).

In most policies, loss to personal property will be handled in one of two ways, depending on the item affected.

  • Unscheduled property. These are items that have relatively predictable value, such as furniture, appliances, most clothes and kitchen equipment, and most sporting equipment. These items are subject to your policy’s general limits.
  • Scheduled property. These items have the potential to be worth a lot of money, which the insurance company won’t know about until you make a claim that they’ve been damaged or lost. Fine art is scheduled property, and because the company has no idea how much your painting is worth, the risk that it will have to pay out on a huge claim is evident. (By contrast, insurance companies can estimate the dollar value of the contents of a completely ruined kitchen, and having done so, it sets the policy premium accordingly.) Because insurance companies don’t like to insure items whose worth could be sky high, they isolate these items and impose a cap on what they will pay out. Normally, customers can buy additional insurance that will cover the replacement of these pricey items.

Examples of scheduled property and associated sublimits might include:

  • money or bank (ATM) cards, with a $100 sublimit on loss, theft or unauthorized use
  • bullion or valuable papers, with a $500 sublimit, and
  • jewelry, watches, furs, or fine art, with a $500 sub-limit for loss by theft.

Talk to your insurance agent for more information; or, if you are in a dispute with your insurance company over coverage, consult an experienced attorney.

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