Your homeowners policy includes a section called Coverage C that is designed to pay for your personal belongings when they are damaged, destroyed, or stolen. But the dollar amount you actually receive after a loss depends heavily on how that coverage is structured. Replacement cost and actual cash value policies can produce dramatically different claim checks for the exact same loss. Understanding the mechanics before a claim happens puts you in a much stronger position.
The most important distinction in personal property coverage is whether your policy pays replacement cost value or actual cash value. Replacement cost pays what it would cost to buy a comparable new item today. Actual cash value pays replacement cost minus depreciation—meaning a five-year-old laptop that costs $1,200 to replace might settle for $400 or less. Many base homeowners policies default to actual cash value for contents unless you specifically upgrade. If your policy says ACV, you could be significantly undercompensated after a major loss.
Coverage C is typically set at 50 to 70 percent of your dwelling coverage limit. On a home insured for $400,000, that could mean $200,000 to $280,000 in personal property protection on paper. But the total limit is not the only number that matters. Most policies apply sub-limits to specific categories of property, including:
If your belongings in any of these categories exceed the sub-limit, you will need a scheduled personal property endorsement—sometimes called a floater—to cover the difference.
Coverage C only pays for losses caused by perils your policy covers. A standard HO-3 policy covers your dwelling on an open-perils basis but typically covers personal property on a named-perils basis, meaning only specific causes of loss listed in the policy are covered. Common covered perils include fire, theft, windstorm, and vandalism. Flooding is excluded under virtually every standard homeowners policy, as is earthquake damage. If a flood ruins your furniture and electronics, Coverage C will not respond—that requires a separate flood policy.
Many homeowners discover their personal property coverage has serious gaps only after a loss, when it is too late to fix them. A Truscott coverage review examines your Coverage C limits, your replacement cost vs. actual cash value election, and whether high-value items need a scheduled endorsement to be properly protected. Reach out to us and we will make sure your belongings are covered for what they are actually worth.
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