Which of the following insurance types will cover the possessions inside your home? Here are 7 best insurance policies to cover possessions inside your home. One of the selling point of insurance is that it comes with this peace of mind where you know that you cannot be placed in a tight corner by unforeseen circumstances.
Insurance companies ride on this peace of mind to offer coverage to people on just about any tangible thing including the possessions inside the home. In fact, there are types of insurance that are dedicated to specially covering just the things you have inside your home, apartment or condo. Some of these policies are thus;
7 Types of Insurance That Cover Possessions Inside Your Home
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1. Personal property insurance
Personal property insurance is one insurance policy that takes care of the contents of your home. In this policy, you typically get reimbursed in the event that your possessions within the home (whether you own or rent) are damaged, destroyed, lost or stolen.
Personal property insurance covers a wide range of things in the home and they include but are not limited to;
- Rugs, window treatments and other décor
- Wine and spirits
- Sporting goods and toys
If you will feel so bad to lose these properties listed above in the event that your home is involved in a fire, flood or is burgled, then you know it’s high time you start thinking of getting a personal property insurance. The cost to insure your personal property is included in your homeowners insurance rate.
There is not a separate charge to cover the items in your home, unless you choose to buy extra protection for high-value items you own. Your home insurance company uses the amount of coverage you have for your house to determine how much personal property insurance to provide.
It is usually a percentage of the building coverage amount. That percentage is generally in the range of 40 to 75 percent. However, coverage for certain types of personal property–artwork, jewelry, antiques and firearms, for example–is very limited, ranging from $1,000 to $2,500. You’ll find these exclusions in your policy.
If the value of your personal property exceeds the limits of your homeowners insurance, or if you have valuable items that are insufficiently covered by a standard homeowners policy, you may need to expand your contents coverage with a scheduled personal property endorsement (aka a personal article floater).
2. Homeowners Insurance
Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s house and to assets in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
When a mortgage is requested on a home, the homeowner is required to provide proof of insurance on the property before the lending bank can issue him or her a mortgage. The property insurance can be acquired separately or by the lending bank.
Homeowners who prefer to get their own insurance policy can compare multiple offers and pick the plan that works best for their needs. If the homeowner does not have their property covered from loss or damages, the bank may obtain one for them at an extra cost.
Payments made toward a homeowners insurance policy are usually included in the monthly payments of the homeowner’s mortgage. The lending bank that receives the payment allocates the portion for insurance coverage to an escrow account.
Once the insurance bill comes due, the amount owed is settled from this escrow account. Your homeowners insurance policy covers a whole lot of things and they may include;
- Physical Structures: If your house or other structures on your property, like a garage or tool shed, are damaged or a deemed total covered loss, they will arrange for them to be repaired or replaced.
- Personal Belongings: If your personal possessions, like furniture, clothing, and appliances, are damaged or deemed a total covered loss, they will arrange for them to be repaired or replaced.
- Liability: If someone is accidentally injured or has their own property damaged while on your premises, they will defend any claims against you and pay them up to your policy limits. The company will also pay for reasonable and necessary medical expenses up to the limit you purchased, regardless of who was at fault.
- Additional Living Expenses: They will cover your additional expenses if, due to a covered loss, you need to live elsewhere while repairs are being made to your home, enabling you to return to living your life as quickly as possible. When a claim is made on any of these incidents, the homeowner will be required to pay a deductible, which in effect is the out-of-pocket costs for the insured.
3. Home warranty
Yet another way you can protect the properties in your home is through a home warranty, which provides discounted repair and replacement services for household appliances and systems.
A home warranty is an annual service contract that covers the repair or replacement of important appliances and systems components that break down over time. Home warranties cover the parts and components of major home systems and appliances. Typically, home warranties can cover systems such as heating, air conditioning, and plumbing.
Covered appliances can include the dishwasher, oven, and washer/dryer. When a breakdown occurs to these or any other items covered under the contract, the home warranty company can repair or replace them. Properties a home warranty covers include;
- Central air conditioning
- Electrical system
- Garage door openers
- Attic, Ceiling, and Exhaust fans
- Central vacuum system
- Plumbing System
- Plumbing stoppages
- Toilet tanks and bowls
- Water heater
- Circulating pump
- Sump pump
- Pressure regulators
- Built-in microwave
- Clothes washer and dryer
- Kitchen refrigerator
- Garbage disposal
- Instant hot water dispenser
- Trash compactor
4. Renters insurance
Another insurance policy that takes care of personal properties in the home is the renters insurance. If you rent, your landlord’s insurance policy does not cover your personal things. For this reason, many advisers recommend that landlords require renters to carry their own insurance coverage for personal property.
Renters insurance reimburses you if your belongings are stolen, damaged or destroyed while in your home, and in some cases, while away from home (for example, if your laptop gets stolen on your way to work).
Renters insurance costs considerably less than homeowners or condo policies because it doesn’t cover the building or the landlord’s personal property used by the renter–for example, furnishings and appliances in the apartment or rental home.
Renters insurance protects more than your belongings–you get medical payments for your guests and liability coverage as well. If your dog, for example, bites a visitor to your home, you could end up paying out-of-pocket for your guest’s medical costs and other damages if you don’t have renters insurance.
Even if you and your dog are not at fault, you may have to defend yourself in a lawsuit, and that also costs money. According to Insurance.com’s rate analysis, the average renters insurance policy costs just $197 per year, or about $17 monthly.
5. Condo or Coop Insurance
Condo insurance is a policy that is purchased by the owner of a condo unit. Also known as an HO-6 insurance policy, condo insurance protects condo units while also providing both personal liability coverage and living expense coverage if a condo becomes uninhabitable.
HO-6 policies are also called walls-in coverage because they protect your individual unit, while your condo association’s master policy covers the building’s common areas. It generally helps pay to repair your unit and your belongings if they are stolen or damaged by certain perils, such as fire or vandalism.
Insurance for co-ops and condos is a lot more complicated than homeowner insurance, but one thing is certain, this type of insurance replaces your properties after an accident. Under the general terms of HO-6 condominium owner coverage, your policy should cover your personal property from 16 perils:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Vandalism or malicious mischief
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
The coverage also include;
- Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.
- Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.
- Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.
- Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)
- A basic condo/co-op policy should also provide liability protection for incidents such as someone tripping and falling while inside your unit. In addition, if a covered peril should make your condo or co-op uninhabitable, your policy should include a provision to cover additional living expenses incurred if you have to find temporary shelter elsewhere.
When discussing your policy with your agent or insurance company, make sure you have enough liability coverage. The cost of condo insurance depends on factors, such as where you live and how much coverage you need.
Florida has the highest condo insurance rate on average ($1,467). The weather is a major factor in those costs. This is because this state is prone to hurricanes and strong storms. Insurers view condos in that state a higher risk than say Iowa, Vermont and Wisconsin, which have the lowest average condo insurance rates.
6. Contents insurance
Contents insurance is insurance that pays for damage to, or loss of, an individual’s personal possessions while they are located within that individual’s home. Some contents insurance policies also provide restricted cover for personal possessions temporarily taken away from the home by the policyholder.
As a general rule, your contents are the things that could be taken with you if you decided to move house. Contents insurance helps pay to replace or repair your personal belongings if they’re stolen or damaged by a covered peril, such as a fire.
So, if someone breaks into your home and steals your laptop, or your clothing and furniture are ruined in a fire, you may find that contents insurance helps cover the loss. A contents insurance policy protects your stuff against theft or damage from fire and flooding. This could include things like:
- Furniture – beds, sofas, wardrobes and dining tables.
- Entertainment – DVDs, CDs, video games, books and vinyl.
- Kitchenware – pots, pans, cutlery as well as microwaves, kettles etc.
- Soft furnishings – cushions, curtain and bedding.
- Electricals – TVs, DVD players, laptops, games consoles and digital media.
- Toys, ornaments and antiques.
- Clothes and jewellery.