When placing insurance coverage on a home, agents usually review the various categories of coverage with their clients, going over such things as the home (or dwelling) itself, contents of the home, and other structures on the premises. To determine a contents limit, policies typically use a percentage of the dwelling limit, usually 70-75%. So for instance, on a home with a dwelling limit of $300,000, the contents limit would be in the $210,000-$225,000 range. However agents often fail to mention that some of the contents of a home are only covered up to a certain amount.
So what types of property are we talking about? The typical homeowner’s policy places limits on the following items: watercraft, firearms, money, coins, bank notes, securities, deeds, passports, manuscripts, stamps, tickets, trading cards, jewelry, watches, furs, precious stones, silverware, flatware, trophies, and fine arts. Unfortunately, these limits are sometimes not enough.
A good insurance agent will inquire as to whether you own any items such as these, and if so will recommend a policy endorsement to cover these items, called a Scheduled Personal Property endorsement. This endorsement will allow you insure specific property up to the limits necessary to ensure adequate coverage. Depending on the type of property and/or the value of the property, an appraisal may be required, but not always. A list of descriptions and values of each item will often suffice. This endorsement will also allow scheduling of items not limited by the policy, but which may have values difficult to determine by claims adjustors, items such as antiques and musical instruments. Adding such items before a loss occurs will assist with proper claim settlement in the event of a loss.
A Scheduled Personal Property endorsement offers two distinct advantages over just a standard insurance policy:
1. Special Cause of Loss – a typical homeowner’s policy covers losses to contents on a named perils basis, i.e. the perils that trigger coverage are specifically listed in the policy, perils such as wind, rain, hail, fire, theft, and vandalism. Scheduled Personal Property endorsement, on the other hand, covers losses to scheduled property on an “all risk” (special form) basis, i.e. the perils which are excluded from triggering coverage are specifically listed in the policy, perils such as nuclear war, riot, and civil commotion. Under a special form, many more perils will trigger coverage due to the small number of those excluded. A relevant example would be the peril of “mysterious disappearance”, which would trigger coverage if you lost something, such as a ring, and didn’t know how it was lost. This is not a named peril; however it is not excluded under a special form.
2. Lower or No Deductible – While a homeowner’s policy deductible is typically $1,000 or more, both to save money on premiums and to limit premium surcharges due to small claims, a separate deductible, often set at $0, can be chosen for your scheduled property.
We at The Dearborn Agency encourage you to call your independent insurance agent today to review your coverage on your large ticket personal property items, and all your insurance needs.