What is Personal Property Coverage?

Your Homeowners Policy is a package of various insurance coverages. One of the coverages in the homeowners package is designed to protect your personal property (sometimes called “contents” coverage) against a covered loss. For example, your furniture and clothing are Personal Property and would be covered if they were damaged or destroyed by fire or any of the other covered perils (subject to your deductible.)

Many people, however, do not realize that most Homeowners policies provide Actual Cash Value (ACV) coverage rather than Replacement Cost coverage for personal property losses.

What is the difference?

Actual Cash Value is the true value of the item at the time of loss. For example, a TV will usually last about ten years. If you purchased a set five years ago for $700 and lost it in a fire today, you would not recover the full $700 you paid since the set has used up one-half of its expected life.

Replacement Cost is the amount of money needed to completely repair or replace the items at the time of loss, regardless of its age. If you lost a five-year old, $700 TV set in a fire today, a replacement cost policy would pay the full cost to replace that TV with the same model or one of comparable quality (subject to your deductible.)

You can insure your Personal Property for its Replacement Cost Value

For about 10% more premium than you now pay for homeowners coverage, (percentage is higher for forms HO 4, Tenants Form and HO 6, Condominium Form), you can add a Replacement Cost Endorsement to your Homeowners Policy. Subject to some reasonable special terms, the Replacement Cost Endorsement changes your Personal Property coverage from an Actual Cash Value basis to a Replacement Cost basis.

Special terms and conditions

The Replacement Cost Endorsement contains some reasonable exclusions and limitations. For example, it does not apply to articles of rarity and antiquity that cannot be replaced. (These articles require additional specific insurance policies.

Any special coverage limits included in your Homeowners Policy also apply to this endorsement. In addition this coverage only applies to property you own and which you have maintained in good and workable condition.

Since this site is only a summary of the Replacement Cost Endorsement,

For More Information

we will be happy to contact you and offer a complete explanation. Insurance is abstract. We have the professional ability to explain all of the nuances.