There is no doubt that homeowner’s insurance is important: it covers your home, some improvements on your property, other structures on your land, and your personal property.
While you may think that this means that everything in your home is covered completely, the coverage for your personal property can be limited to loss due to specific events, and up to a specific dollar value. That means that if you’re looking to properly protect your belongings, it might be time to consider purchasing scheduled personal property insurance.
Standard vs. Scheduled Personal Property Insurance
Standard personal property insurance is included on every home insurance policy, and will cover your personal belongings from very specific events, like floods, fires, and theft. There will also be a total maximum amount that your loss will be covered for, with some items having a special, in-category limit, and a deductible that will apply prior to getting paid for your loss.
While that may sound like all that you need, when you and your broker go through your policy, you may find that you don’t have the coverage you expected.
For example, let’s say you have a ring that you had inherited that was appraised for $5000 and, unfortunately, you were the victim of a theft. Several other jewellery pieces in your home were stolen, so your total loss was over $5000 and you submit a claim for your loss. While your overall personal property limit may be higher, your policy’s jewellery special limit may only be $5000. This means that you will only be compensated for $5000, regardless of the total value of the loss and your overall personal property limit, not to mention the deductible you would have to pay for the claim overall. If you were to lose the same ring because it accidentally fell down the drain, it’s possible that you’ll be unable to recover the costs of the loss at all, because these types of losses may not covered by your policy.
This is where Scheduled Personal Property Insurance can help. Scheduling your personal property is optional insurance that you can add on to your homeowner’s insurance policy for items that you would like to cover that exceed the value limits within the policy itself. Think of it like taking out a policy specifically for those items that you’ve decided to include in the schedule.
In the example above, you may have spoken to an expert broker who had told you about scheduling that inherited ring. You suffer the same loss of the ring, as well as other jewellery that you have at home. With the ring scheduled, it would no longer be included with the standard personal property insurance and could be covered for the entire appraised value with little to no deductible.
Why Schedule Your Personal Property
Scheduling your personal property on your insurance sounds amazing, and it is! We would recommend it to anyone who has items they own that exceed your policy’s total personal payout or special payout limits. If you have something of personal, sentimental value, you may want to consider scheduling that item too.
Here are three major reasons to schedule your items:
1. Avoid In-Category Special Limits and Undefined Losses
In-category special limits are the total amount that an insurance company is willing to pay for a loss for a specific category of items, regardless of your total personal property coverage. Undefined losses refer to loss types that are not specifically listed in your policy. In the example that we posed above, we talked about a policy with a jewellery special limit of $5000, meaning that if you were to suffer a loss, so long as the type of loss you suffered was one of the specifically listed types, the most your insurance company would be willing to pay for that loss is $5000 after your deductible. If you were to misplace your jewellery, you may not be covered at all, because loss due to misplacing items is not always covered.
Special limits and specific loss types exist for items like:
- Coins and Collectibles;
- Lawn Mowers;
- Garden Tractors;
- Books, tools, and instruments that pertain to a business;
- Money; and
- Spare automobile parts.
Scheduling your belongings removes them from the limitations of the in-category special limits, and gives them their own policy within your home insurance policy. It would be subject to its own maximum payout per item listed, rather than an aggregate amount, and could be covered for more types of loss than the ones defined in your policy, helping better protect the value of your items.
2. Paying Less to No Deductible
While scheduling your personal belongings may sound like an expensive endeavor, it can actually be more economical than leaving everything to be covered by your standard contents insurance. If you schedule your belongings, you can avoid the deductible on items that have a high likelihood of theft, including the things that you tend to take with you when you leave your house.
Items that would be included in this category are:
- Medical equipment (hearing aids, insulin pumps, etc);
- Musical Instruments; and
- Sports equipment.
Let’s say you are out at a park with your family and your bikes. You take a rest for a moment by a river in the park and leave your bikes. When you return, your bikes have been stolen. While the total value of your bikes may only be in the range of $2000, well under the limit for your personal property claim, the deductible may be $1000. This means that you will only be paid for the amount of your loss over $1000, so you would only get half of the value of your loss back. If you schedule your family’s bikes on your home insurance policy, you could avoid the deductible altogether, and be paid for the full value of your loss.
3. Protect the Full Value of Your Possessions
Your personal possessions are covered under your home insurance policy, but the amount that an insurance company is willing to pay you in the case of a loss is typically done by a calculation of its replacement value or the actual cash value of that item. This means that the insurance company will only pay you for the amount that you would pay to get the same item in the same condition, or how much it would be to purchase another similar item.
While this may be fine for most of your possessions, when it comes to things like fine art, silverware, coins, stamps, and other collectibles, simply getting the actual cash value of that item may not be enough to cover the full value of your loss, especially since the value of these items may go up or down over time. Rather than debating at the time of a claim over whether or not your paintings or collectible cards are really worth thousands of dollars, you can schedule them to have an agreed upon value before a loss occurs. This will require that you get your items appraised every so often to ensure that the value of these items is clearly communicated to your insurance company, but it is well worth the effort to protect the value of your belongings.
Still a bit confused about what personal belongings should be scheduled? Wondering what you are not protecting in your home? Let us help you. At Northgate Insurance Centre, we have been providing expert insurance advice to Calgarians for over 30 years. With policies to keep you covered when you are working from home, we are here to get you competitive coverage with the best rates. Reach out today to have your questions answered.