Your personal property ranges from the strictly practical (e.g., your lawn mower) to perhaps a few luxuries, such as a leather couch. You generally want, need, and maybe even love your stuff. If anything were to damage or destroy your belongings, you’d want the quality of the replacements to be just as good as that of the originals. After all, that’s why you have insurance, right?
Let’s talk about a very big “gotcha” provision in most home, condo, and renters policies. Standard home insurance policies pay claims for loss to personal property on an “actual cash value” basis. When you file a claim, your damaged or destroyed property is compared against a “schedule of depreciation” to determine its value at the time of the loss. This applies even if your property (e.g., your furniture) is in excellent condition, with many more years of functional life. The amount of your claim settlement will be the depreciated value of your damaged/destroyed property minus the policy deductible. That’s not likely what you envisioned.
If you were to lose your home and all your belongings in a house fire, you’d have a hard time replacing all that you’ve lost with this standard claim settlement provision.
Investigate a “Replacement Cost on Contents” endorsement for your home, condo, or renter’s policy. This endorsement changes the claim settlement basis to the amount it would take to replace your damaged/destroyed property with new items of the same type and quality. While the policy deductible still applies, you would be in a much better position to quickly get your life back on track.
Our Risk Coaches are licensed insurance advisors who are glad to help you navigate the often-perplexing world of insurance coverage. Contact your local Risk Coach, or call us at 855.227.8211, Monday through Friday, from 7:30 a.m. to 9:00 p.m. ET.
Electric Insurance Company Risk Coaches help you assess your current coverages and exposure to risk based on the information you provide during your discussion with them. The services provided are for informational purposes only and do not create a professional or fiduciary relationship. Incomplete information or a change in your circumstances after your meeting may affect coverage requirements or recommendations.
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