Lots of us are giving and receiving special items this holiday season. You might receive a new piece of jewelry, a new computer, a camera for that photography business you’ve always dreamed of starting, or maybe there’s a gun on your wishlist for that mountain-side hunting trip you’re looking forward to. What happens if you lose that nice gift before it ever makes it under the tree or if it becomes damaged during the excitement of gift-opening Christmas morning? Is it covered?
This season (and all year), it is important to make sure that your valuable belongings are properly insured with a personal articles policy. Without this coverage, if the item was to get lost or stolen, you might be left paying the deductible on your homeowner’s policy in order to have it replaced. Keep in mind, some belongings or certain situations, like when a diamond falls out of your NEW jewelry, may NOT we covered under your homeowner’s policy AND if they are, you would be subject to your homeowner’s deductible.
What is a personal articles policy?
This in an individual policy, separate from your homeowner’s or renter’s policy, that gives you coverage for your more valuable items. With the ability to cover specific, or “scheduled” items, these policies often include things that are more easily lost, misplaced, or have a higher likelihood of being stolen. Jewelry and guns are the most common items you’ll find, but you can add anything that’s considered to be of higher value. For example, you may add a coin collection, fine art, camera, or bicycle.
How does it differ from my homeowner’s or renter’s insurance?
Personal property insurance on your homeowner’s policy covers everything in your home… from furniture to electronics, with special limits for higher value items like jewelry. If you were to take your home, flip it upside down and shake it, everything that fell onto the ceiling would be considered “personal property.”
However, on your basic homeowner’s or renter’s policy, you typically only have $2,500 in coverage. That means if someone stole $10,000 worth of your jewelry, you would only receive $2,500 for it. With a personal articles policy, if you had each piece of jewelry that was stolen listed on the policy, you’d be covered for the entire $10,000 without a deductible.
Similarly, you can also “blanket” these items on a personal articles policy. In this case, you do not have to itemize each individual item and there’s still no deductible.
If I have a personal articles policy, under what circumstances would my items be covered?
This policy gives you coverage for theft, loss or misplacement, and mysterious disappearance. The rule of thumb is that it’s covered for everything except for what’s specifically excluded like general wear and tear or unlikely events.
Would my items be replaced or would I be paid?
You can choose to receive a replacement or to receive the cash value depending on your specific policy, your carrier and the item. Most items are usually covered at replacement. For instance, if you lose a ring that was covered for $8,500, the insurance company is going to try to find one of similar like and quality, meaning a ring that matches the same design, color, clarity and karat.
Some companies will do what’s called an “agreed value”. This is used to cover fine art and sometimes jewelry as well. In this case, the insurance company will simply pay the agreed amount.
How much does a personal articles policy cost?
Personal articles policies are typically very affordable! Depending on the insurance company, these policies typically cost about 80 – 90 cents per $100. For example, $12,000 worth of jewelry may only cost $125 a year for coverage.
How should I know if I need to insure a valuable item or not?
If you’re on the fence about covering your item under a personal articles policy or not, ask yourself, “Could I replace this item immediately and comfortably if something were to happen to it?” If you couldn’t replace the item immediately if it were lost or stolen, a policy might be the right way to go!
