The 5 Basics of Condo Insurance Part 2- Personal Property

March 29, 2007 No Comments

Personal Property Coverage typically protects your personal belongings against the same list of risks and perils mentioned in Dwelling Coverage of Condo Policies Part 1.

Your personal property is not covered by a condo master policy, and you should protect it. Unlike dwelling coverage, where the building policy might provide some coverage, your personal property is at risk.

Personal property includes everything you own in your home. Furniture, TVs, computers, rugs, clothing, books, cookware, etc. Everything that is not attached to your condo is personal property and it should be insured.

How Much Coverage Is Enough?

There are a couple ways to determine how much coverage you need. The question is difficult: what is the replacement cost of everything you own? Most often, homeowners undervalue their property and end up under-insuring their property.

One method is to individually value each item in your home. This means taking an entire inventory of your home, and assigning a value to each item. Many homeowners also like to take pictures, or even a video, of their home to keep on file in case of a loss.

Another method of determining your personal property value is to use a simple multiplier. As a rule of thumb, for the first 1,000 square feet of your condo, assume $40,000 in personal property. For each additional 500 square feet, add approximately $5,000 in coverage.

Example: If your unit were 1,500 square feet you would want to consider purchasing $45,000 in personal property coverage.

Unless otherwise specified, Coverage C – Personal Property Coverage is for actual cash value at the time of loss, which is the replacement cost of the item, minus depreciation. Buying an endorsement can increase this coverage.

Do you need more than actual cash value coverage for your personal belongings?

We recommend replacement coverage for your personal property, rather than actual cash value. If you purchased most of your belongings a few years ago, their current depreciated value may be a lot less than what it would take to replace them.

Example: If your television is damaged in a fire, actual cash value coverage pays out the amount of money your 10-year-old TV would be worth today, which may only be a few dollars. Replacement cost coverage would pay for a new TV of the same size and functions. This is why replacement cost coverage is always better than actual cash value.

If you have personal property such as firearms, jewelry, furs, antiques, collectibles, fine artwork, musical instruments or office equipment, you may need additional coverage. A standard condo policy usually has specific dollar limits for items like these. You can add or increase coverage amounts with an endorsement or additional policy.