Personal Property Replacement Cost Coverage for Homeowners
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What is Personal Property Replacement Cost Coverage for homeowners?
This optional coverage can be applied to your homeowners insurance policy and covers the total cost to repair — or replace — most damaged items with their brand-new value, in the event of a covered loss.
- This coverage distinguishes how you would like your items valued if damaged
- Your deductible for this coverage is your Personal Property deductible
What's the difference between replacement cost and actual cash value for personal property coverage?
Replacement cost and actual cash value are just different ways of calculating how much you'll be paid if your property is damaged or needs to be replaced as a result of a covered loss.
In general, replacement cost coverage pays to replace your belongings with new ones or of similar value if it were new. On the other hand, actual cash pays the value of what your belongings are worth today by considering things like age and wear and tear.
Let's say your dining room table was damaged in a covered loss. A few years ago, when you bought it, it cost $2,000. Today, it's worth $1,000 due to normal wear and tear. Now let's look at how each would pay for your damages.
- Replacement Cost Coverage would pay to replace your table with a brand new one. So let's say that the exact table is no longer made, but one of similar quality and make now costs $3,000. You'd be paid $3,000.
- Actual cash value would pay you what it's worth today which is $1,000.
Actual cash value is usually included in your homeowners insurance policy whereas Replacement Cost Coverage is typically an optional coverage.
What is covered by Personal Property Replacement Cost Coverage?
In general, Personal Property Replacement Cost Coverage pays for damage to your belongings inside your home, if the damage is caused by a covered loss.
Examples of personal property that can be covered
- Electronics (ex. TV, computer, tablets, phones)
- Furniture (ex. couch, chair, bed)
- Musical instruments
- Jewelry (in some cases)
- Appliances (ex. refrigerator, stove, microwave)
Note that if you own valuable items that are worth over a specific amount (set by your insurance company) you may need to buy additional coverage to ensure they are covered.
What is not covered by Personal Property Replacement Cost Coverage?
In general, Personal Property Replacement Cost Coverage will not pay for damages caused by
- Termites and/or insects
- Pest (animal) infestation
- Mold or mildew
- Normal wear and tear
Personal Property Replacement Cost Coverage typically has limits for expensive items. For example, a policy may only cover up to $1,000 per piece of jewelry, or up to $2,500 total for jewelry in a covered loss. Therefore, it is important to understand the value of your belongings and your specific policy limits and deductibles to make sure your items are covered.