Home Insurance Breakdown: What Is Coverage C (Personal Property)?

Personal property coverage, which is Coverage C within home insurance policies, helps to pay for your personal items that have been damaged, destroyed or stolen due to a covered peril. It’s standard protection within many home insurance policies and is pivotal to cover those personal items that mean the most to you.

The most common perils that damage or destroy personal belongings are vandalism, fires, tornadoes, hurricanes and hail storms. There are many other covered perils in home insurance policies, but each policy may have different qualifiers to determine coverage.

The most common personal belongings people have inside their homes and often file home insurance claims for are:

There are only two forms of personal property coverage that come standard in home insurance policies. It’s important to realize that just because you maintain adequate coverage for those belongings, it doesn’t always mean you’re totally covered.

A covered peril must be the reason for a claim. It’s also important to note that jewelry and high-value arts do not necessarily fit within either of the following categories.

Actual cash value is usually the least expensive version of personal property coverage. This coverage factors in depreciation caused by age and wear and tear to pay a number that’s more closely related to the item’s current value.

Let’s say you bought a TV for $2,000 five years ago. If you went to the same store and tried to buy the exact same model, it wouldn’t still be selling for $2,000. That’s because newer models with more features have taken its place. Plus, it has five years’ worth of wear and tear.

It would cost less money today to buy that TV, so that’s why the claim payment from actual cash value coverage would be less than what you originally bought the TV for five years ago. If you hope to get the same amount as what you bought it for, check out the next option.

Replacement cost is the holy grail of personal property coverage. If a claim is filed, it can pay up to the amount you bought an item for — without factoring in wear and tear, age or any other scenarios. So, a TV you bought five years ago for $2,000 could still, technically, be worth $2,000 in an insurance claim.

It is also more expensive than actual cash value coverage, so it will raise your home insurance payment. But if you have a lot of high-value items (like electronics) that quickly depreciate in value, you may want to consider purchasing replacement cost coverage.

It will help offset the cost of replacing your items and will allow you to live a similar lifestyle without paying out of pocket if a covered peril were to damage or destroy your personal belongings.

The answer to that question resides in how much value you have in your personal belongings. Everyone has different tastes, needs and wants, so the answer isn’t an end-all-be-all solution.

For instance, a college student may only have a laptop, TV and a bunch of (hopefully) washed clothes packed in their dorm or off-campus home. In that instance, they’d have less to protect and would, therefore, need less coverage than people like a married couple.

If a married couple just bought a house and filled it with new furniture, a few TVs, nice electronics and a whole lot of clothes, they’re going to need more coverage than a college student would need to protect their belongings.

The best option to figure out how much coverage you need is to make a list of all the personal belongings you store in your home. Then write down how much you bought each for and what year you bought it.

You will then have a better perspective of how much personal property coverage you need.