Policy Sublimits Limit More Than You May Think
For anyone that carries a property insurance policy, whether it is homeowner's, condo unit owner's, or renter's, it may come as a shock to know that all of your personal property is not covered to its complete replacement value.
This is due to said policies having what are called sublimits - literally limits on your limits.
Jewelry, furs, firearms, silver, musical instruments, cash, securities/stamps, and even computers have caps.
What will follow is an explanation as to how to recognize this in your insurance policy, and three things you can do to get this under tighter control immediately.
On your property policy, there is a coverage dedicated to personal property; that is, anything not nailed down.
If you were to remove your roof, turn the dwelling upside-down, and shake it, anything that hits the dirt is part of that coverage.
The question becomes how much of that is covered.
For an individual item of jewelry for example, the maximum payout may be $500 or $1000.
This could be all well and good for your sterling silver band, but what about that $12,000 watch, or your 18K white gold and platinum diamond engagement ring? Items of this nature require scheduling, which simply means you inform your agent of the specific item and the item's value.
Once this stage is complete, simply supply your agent with photos of the item, appraisals of the item, and any other requirement specific to your policy (this may vary slightly from company to company, or from state to state).
In some cases, it is less expensive to purchase a separate policy just to insure your valuables, which is commonly referred to as a Personal Articles Floater.
Speak with your agent about assembling a customized plan such as this; do not rely on an 800 number or website to insure these items correctly.
Now that you've addressed the big stuff, let's move on to everything else.
Policies will replace your possessions in one of two ways - ACV (Actual Cash Value) or RCV (Replacement Cost Value).
ACV factors in depreciation, and RCV does not.
Let's say you have a TV you purchased, two years ago, for $800.
If you went to the electronics store to buy this TV now, it would only cost you $400, since newer models are the only ones worth the $800 price tag.
ACV would give you $400, and RCV would give you $800.
It is worth finding out which one your policy has, and see which way you are comfortable.
A third, often overlooked option for a policy is the Special Personal Property limit.
Now that we've made sure we have locked in the insured value of an item, it should be noted that all losses are not covered either.
An example of a typically excluded loss is mysterious disappearance (this refers to coverage in where you cannot locate an item - it may have been stolen, it may have been lost, and you cannot say for sure either way).
By giving yourself Special Personal Property coverage, you will be closing the gap in how things are covered, and many companies increase the sublimits referenced in this article as well.
These two aspects of a property policy are not well known, and often not found out until it is too late.
Take a moment to review your policy today, and make sure you are covered the way you need to be, not just way you may have thought you were.
This is due to said policies having what are called sublimits - literally limits on your limits.
Jewelry, furs, firearms, silver, musical instruments, cash, securities/stamps, and even computers have caps.
What will follow is an explanation as to how to recognize this in your insurance policy, and three things you can do to get this under tighter control immediately.
On your property policy, there is a coverage dedicated to personal property; that is, anything not nailed down.
If you were to remove your roof, turn the dwelling upside-down, and shake it, anything that hits the dirt is part of that coverage.
The question becomes how much of that is covered.
For an individual item of jewelry for example, the maximum payout may be $500 or $1000.
This could be all well and good for your sterling silver band, but what about that $12,000 watch, or your 18K white gold and platinum diamond engagement ring? Items of this nature require scheduling, which simply means you inform your agent of the specific item and the item's value.
Once this stage is complete, simply supply your agent with photos of the item, appraisals of the item, and any other requirement specific to your policy (this may vary slightly from company to company, or from state to state).
In some cases, it is less expensive to purchase a separate policy just to insure your valuables, which is commonly referred to as a Personal Articles Floater.
Speak with your agent about assembling a customized plan such as this; do not rely on an 800 number or website to insure these items correctly.
Now that you've addressed the big stuff, let's move on to everything else.
Policies will replace your possessions in one of two ways - ACV (Actual Cash Value) or RCV (Replacement Cost Value).
ACV factors in depreciation, and RCV does not.
Let's say you have a TV you purchased, two years ago, for $800.
If you went to the electronics store to buy this TV now, it would only cost you $400, since newer models are the only ones worth the $800 price tag.
ACV would give you $400, and RCV would give you $800.
It is worth finding out which one your policy has, and see which way you are comfortable.
A third, often overlooked option for a policy is the Special Personal Property limit.
Now that we've made sure we have locked in the insured value of an item, it should be noted that all losses are not covered either.
An example of a typically excluded loss is mysterious disappearance (this refers to coverage in where you cannot locate an item - it may have been stolen, it may have been lost, and you cannot say for sure either way).
By giving yourself Special Personal Property coverage, you will be closing the gap in how things are covered, and many companies increase the sublimits referenced in this article as well.
These two aspects of a property policy are not well known, and often not found out until it is too late.
Take a moment to review your policy today, and make sure you are covered the way you need to be, not just way you may have thought you were.
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