What is contents insurance?

If you have homeowners insurance, your policy covers more than just the structure of your home. It typically also includes contents insurance, which provides coverage for your belongings if they are damaged by a covered peril — like a fire — up to your policy’s coverage limits. Knowing what exactly this coverage includes may help you decide how best to financially protect the contents of your home.

What is contents coverage?

Contents insurance, also referred to as personal property coverage, covers the contents of your home — up to your policy limits and barring exclusions.

In short, your contents coverage applies to the vast majority of the belongings that you store in your house, such as furniture, clothing and appliances. Your contents insurance may also offer financial protection for things you store off-premises (up to a percentage of your policy limit) and damage to any of your guests’ belongings if they are impacted by a covered peril.

Contents are covered on a named perils basis in standard home insurance policies. This means that your personal belongings are only financially protected from perils specifically listed in your home insurance policy. These typically include perils such as fire, theft and windstorms, but do not include earthquakes, floods, neglect or mold unless you have coverage in place through an endorsement or separate policy.

What does home contents insurance cover?

Almost everything you own may be covered under your personal property coverage, but there are some limitations and exclusions. Here’s a general breakdown of what contents coverage usually entails:

What is typically covered:

• Furniture
• Clothing
• Electronics, including TVs and computers
• Decor
• Books
• Sports equipment, including bikes
• Dishes
• Jewelry (up to a certain value)
• Art
• Appliances that are not built-in (e.g., blenders, toasters, mixers)
• Firearms

What is not typically covered:

• The full value of expensive items
• Vehicles and aircrafts
• Installed features like flooring, furnaces, cabinets, etc. (if you own a home, dwelling insurance will step in here)
• Animals, including birds and fish
• Items covered by a separate insurance policy (e.g., jewelry that has its own policy)
• Belongings owned by any tenant or boarder
• Items that you lost or misplaced

Contents insurance coverage limits

The Insurance Information Institute (Triple-I) indicates that most homeowners insurance policies include contents insurance at 50-70 percent of the dwelling coverage amount that’s listed on your policy. So if you have $300,000 in dwelling coverage, you might expect somewhere between $150,000 and $210,000 in home contents insurance.

As a renter or condo owner, you may not need any or as much dwelling coverage, so you typically get to choose your own contents insurance limit, although your carrier may indicate a required or recommended minimum or maximum.

Creating a home inventory may help you decide if you have enough contents coverage for your belongings.

Actual cash value vs. replacement cost value

When insuring your home contents, most insurance companies allow you to choose between insuring your items for actual cash value (ACV) or replacement cost value (RCV). RCV coverage will pay to replace an item destroyed by a covered peril with a similar version at today’s prices. On the other hand, ACV coverage pays you for the depreciated value of the item. This is calculated by subtracting the item’s depreciation (determined at the time of the loss) from its current replacement cost.

RCV coverage is typically more expensive, but it might make sense if it would be a financial strain to replace your furniture with new versions after a total loss. On the other hand, if most of your furniture and electronics are fairly new or you have the money to replace items comfortably after a loss, ACV may be sufficient for you. Speaking with a licensed insurance agent may help you identify the best coverage option for you based on your belongings and the cost of coverage.

Valuable item sublimits

You will notice quite a few high-value items have been included in the list of what contents insurance covers. While home contents coverage usually will help pay to replace the item, almost all policies place sublimits on certain item types. For example, your policy might pay out up to $1,500 to replace stolen or damaged jewelry.

Read your policy to identify any specific sublimits. If your contents insurance would not be sufficient to cover some of your more expensive belongings, you might explore specifically adding them to your insurance policy through a rider or endorsement (for an additional cost). Alternatively, you may be able to get a separate insurance policy for them.

Frequently asked questions

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    Do I need contents insurance?

    Contents insurance is included in standard property insurance policies, including renters insurance. You are not legally required to carry home insurance, but your lender will usually require it if you have a mortgage on your home. The cost of a home insurance policy, including contents insurance, is less expensive than rebuilding your home and replacing your belongings after a total loss. Contents coverage is initially calculated as a percentage of your dwelling coverage on a standard homeowners policy, but choosing more or less coverage will raise or lower your premium. If you want contents insurance in place, but you want less robust coverage, you might consider choosing ACV coverage for your belongings.
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    How much contents insurance do I need?

    The amount of contents insurance you need will depend on the items you own and which items, if any, require special endorsements. All home insurance policies include contents coverage, so you must have the minimum required amount if you choose to carry a home policy. Taking inventory of your belongings may help you estimate their dollar value, and you can use this inventory list as a basis for building your insurance policy.
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    Does contents insurance cover business items?

    When it comes to personal lines insurance, like homeowners, condominium and renters insurance, contents insurance typically only covers your personal belongings. That said, some insurance companies may provide limited coverage for business equipment — typically up to $2,500 in coverage, according to the Insurance Information Institute. Some insurers may also offer endorsements for small businesses that store inventory or equipment in a home office.
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    Is contents insurance the same as personal property coverage?

    Yes, content insurance is another name for personal property coverage. It may be referred to as contents coverage, personal property coverage or coverage C in your home insurance policy.