Does Homeowners Insurance Cover Contents of Home?

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Andrew Lee is insurance content writer and editor for Andrew holds a Bachelor's degree from Ryerson University and has extensive experience of writing content for financial websites. His expertise is especially strong in home and auto insurance.

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For most of us, when we have a problem in our home we worry about not only the home itself, but all of our belongings and irreplaceable items that we have gathered while living there. If you end up having to make a claim, you may be concerned about whether or not your insurance will cover the contents of your home in addition to the home itself. The good news is, homeowners insurance generally offers some amount of personal property coverage. This coverage, otherwise known as contents coverage, pays out a set amount for the value of items lost due to home damage from things like fire, flood, storm damage and other causes.

Types of Contents Coverage

While homeowners insurance provides coverage for both home and contents, the amount paid out and what is covered will vary by policy. There are 3 levels of coverage provided by your homeowners insurance that will determine the replacement value paid out for both your home and your belongings. 

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Actual Cost or Cash Value Replacement Coverage 

The most basic type of insurance coverage covers the cash value of your home and property at the original time of purchase, minus depreciation. Depreciation is the loss of value of property over time and with use. This means that the amount paid originally for the home and belongings is typically greater than the value assessed by the insurance company. 

You will likely have to spend out of your pocket to repair or rebuild your home and replace lost property as the amount paid will be lower than the replacement or repair cost at the time of the claim. 

Replacement Value Coverage 

Replacement value coverage is a step up from actual cost coverage as it provides coverage for the value of your home and possession at the original purchase price without factoring in depreciation. This means that the payout you’re safe from your insurance company is up to the original value of your home or the items that you purchased.

While this doesn’t factor in the cost of inflation it does provide a better amount of coverage than a standard insurance policy that pays the cost of repair or replacement minus depreciation.

Extended Replacement Value Coverage

Extended replacement value coverage is the most comprehensive home insurance coverage for both home damage and lost belongings. This type of coverage pays for the replacement of your belongings along with the increased cost due to inflation as well as the Reconstruction or repair of your home in the event of damage.

While this coverage can be more expensive it is typically the most recommended type when you have a lot of belongings that have substantial value or you’re unable to pay out of pocket to make repairs to your home or replace lost items.

Things to Know About Contents Coverage

While many homeowners would be relieved to know that their homeowners insurance doesn’t cover the contents of their home as well as a repair of their home but there are a few things to know regarding what exactly the insurance will cover and whether or not you’ll be able to replace lost longings if you have to make a claim.

As we discussed, depending on the type of insurance coverage you have, the amount of money you receive for lost items may be lower than the actual cost to replace those items. Beyond that though there are some limitations as to whether or not the insurance company will pay out for lost items.

One typical exclusion from insurance policies we’re lost belongings are not paid for is in the event of a natural disaster.  While certain specific types of coverage may provide assistance such as coverage for wind damage, hail damage, flood, or fire, coverage for below knees may not be included in those policies. 

Another type of exclusion is known as an act of God exclusion. This is where unforeseen events happened to your home but you’re not covered under your insurance policy. This can include things like lightning strikes and other random occurrences that cannot be predicted nor prepared for in which case your insurance company is not likely to cover the damage or loss of property.

Lastly, acts of war are typically excluded from insurance coverage as well. Knowing about these exemptions will prepare you for what you may have to cover yourself when you get ready to make a claim.

Additional Exceptions 

There are a few other things that are worth noting in terms of contents insurance and what is covered by your policy.

For example in cases where you have damage to your home due to an appliance malfunction in some cases your insurance company may not pay the designated amount in your policy if it was found that the damage caused was due to negligence on the part of the homeowner. In these cases, the homeowner would be responsible for any damages incurred and would have to pay out-of-pocket to only replace lost belongings but also repair their home.

It is also important to mention that not all insurance policies cover the replacement of appliances such as water heaters, dishwashers, garbage disposals, etc.

Even though there are a number of exceptions to your contents coverage provided in your insurance policy, there are often additional coverage options that you can purchase that will ensure coverage in the event that you fall under an exclusion such as a natural disaster or act of God. Additionally, you can purchase coverage that is specifically designed to replace major appliances in your home such as those we listed above as well as HVAC systems and other critical components.

If you’re unsure what type of coverage you have and how much your insurance will pay in the event that you lose some of your belongings or your home is damaged. Always a good idea to check with your insurance agent and update your policy if necessary. This will help protect you in the event that you have to file a claim.

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Andrew Lee is insurance content writer and editor for Andrew holds a Bachelor's degree from Ryerson University and has extensive experience of writing content for financial websites. His expertise is especially strong in home and auto insurance.