Homeowners know that having enough dwelling coverage to rebuild your home is important. So, too, is having a policy that covers loss of use and specific risks that apply, such as floods if you live in a designated flood plain.
You'll also want to make sure your home's contents will be covered no matter what the reason for the loss.
But even if you buy the most comprehensive form of home insurance, called an HO 5 policy -- which provides replacement-cost coverage for your home's contents due to any loss not specifically excluded in the policy -- your most valuable property could still be unprotected.
When you buy homeowner's or renter's insurance, the personal contents people typically own, called nonscheduled personal property, is automatically covered. This includes furniture, clothing, appliances and inexpensive electronics.
But for certain types of property, coverage is limited to specified maximum amounts. And some personal property items may not be covered at all. So, if you keep these types of valuable personal property in your home that you want insured, you have two ways to do it.
First, ask your insurance agent to raise the coverage limits in your existing policy. While this is typically the cheapest option, it may not provide the protection you need. That's because there may be limits on the amount of a covered loss, such as $2,000 per jewelry item, with a total limit of $5,000. Another important point is that because certain valuable items can be easily stolen, such as jewelry, most policies limit the nonscheduled coverage for these items to around $1,500.
So, the best option is to purchase a Scheduled Personal Property Endorsement, commonly called a personal property rider or a "floater policy." It cost more, but it provides the broadest protection against any type of loss, including theft and accidents. With this special policy, the loss of a diamond ring down the kitchen sink drain is covered.
Personal property that should be insured under a separate policy or rider includes:
- Valuable art and antiques
- Expensive electronics, cameras, etc.
- Musical instruments
- Jewelry and furs
- Valuable collections of coins, stamps, precious metals, firearms, etc.
To obtain coverage for these items, each one must be professionally appraised, and the appraisal must be submitted to the insurance company. The insurer will then agree on the value when the rider is purchased. If there's a loss, the company will pay the amount listed on the rider for that item.
Some personal property items can't be insured, even under a floater policy. This includes business records and credit and debit cards. And no, you can't insure your pets with a floater.