All About Insurance: How to choose personal property coverage

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By Mike McGinness
Allstate Insurance

Do you know how much your belongings are worth? The figure is often much more than our customers initially think. Taking the time to assess what you own, and to understand how your coverage works, can help you make sure everything you value is adequately covered.

Start by walking around your home and look for items that you spent a lot of money on, or that have appreciated in value since you got them. Having a record of those items (pictures, documents, etc.) – especially those most important to you either financially or personally, is very important in working to ensure they are protected properly. Talk with your Allstate agent on the types of coverages you might want to consider.

You also may want to download Allstate’s Home Inventory Tool or iPhone application to help you record these items and make them more accessible to you (either on your phone or saved as an electronic file away from your home) should a disaster occur.

Finally, you will need to make a decision about how to insure your belongings and choose coverage options to suit your individual replacement needs.

Actual Cash Value vs. Replacement Cost

Actual Cash Value and Replacement Cost coverage options refer to different ways your belongings may be replaced in the event of a covered loss. Many of your belongings will decrease in value over time, so it’s important to consider this when you purchase coverage for protecting your personal property.

Actual Cash Value Coverage

Your personal property is typically covered for what you might expect to get if you sold it at fair market value – possibly at a garage sale, online auction site or other sales event – as replacement cost minus depreciation.

This coverage option may allow for the insured item to be replaced with a used item but not always a new one. Premiums for Actual Cash Value insurance coverage though generally cost less than those for the Replacement Cost coverage option.

Replacement Cost Coverage

With Replacement Cost coverage, your insured personal property items are usually covered for what it costs to buy them again at the time of the claim as new, although premiums for this type of insurance are typically higher than the Actual Cash Value insurance coverage option.

Item Categories and Limits

Insurance companies often group certain kinds of things into categories – and sometimes assign maximum amounts that can be paid to replace all of the items or even single items in the category. Your total property limit may give you the impression you have plenty of coverage, but you may find that your category limit on computers isn’t nearly enough to replace all of the computers in your home.

Insuring High Value Items A common item in a category covered by your policy, such as a watch, may be worth $25 or $5,000. Because this category can vary so greatly in value, your policy may set a “per item limit.”

For example: There may be a $1,000 limit per piece of jewelry and a $2,500 limit for all jewelry as a group. If you own a couple of inexpensive watches, you’re in great shape. If you own a watch that has appraised for $10,000, you have an option to cover that specific watch at a higher amount.

If your valuables exceed per item limits, you may want to ask your agent about a Scheduled Personal Property coverage option to better protect more valuable items.

Insuring Groups of Valuable Items

You can use an Optional Coverage to raise the group limit on a category covered by your policy, such as computers — or you can use it to insure an entire category of items that are not covered by your policy because they are less commonly owned.

To make sure your belongings are adequately covered, you’ll want to go over your policy’s category and item limits with your agent. Find an agent now. Learn about other types of residential insurance coverage How are you covered in the event of a lawsuit? Allstate’s liability insurance overview can tell you. How will you help pay for your guest’s medical bills in the event of an accident? Learn more about guest medical coverage. How are you protected against flood damage? Read about flood insurance.

Insuring Groups of Valuable Items

You can often use an Optional Coverage to raise the group limit on a category covered by your policy, such as computers — or you can use it to insure an entire category of items that are not covered by your policy because they are less commonly owned.

To help make sure your belongings are adequately covered, you’ll want to go over your policy’s category and item limits with your agent.

Learn About Other Types of Residential Insurance Coverage

  • Liability Insurance: How are you covered in the event of a lawsuit?
  • Guest Medical Insurance: How can you help pay for your guest’s medical bills in the event of any accident on your property?
  • Flood Insurance: Can you purchase flood insurance coverage?

For more information, you can contact me directly at 425-774-4488 to receive at no charge a comprehensive review of a broad selection of insurance and financial products, including mutual funds, IRAs, variable and fixed annuities, 529 College Savings Plans and variable life insurance.

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