If you have a homeowners policy, your insurance covers more than just your home. In fact, homeowners insurance comes with contents insurance, also known as personal property coverage. That means that if your belongings are damaged by a covered peril — like a fire — your policy can pay to help you replace what you lost, up to your coverage limit.

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Personal property coverage is also available with other types of property insurance, like renters or condominium insurance. Knowing what exactly this coverage includes, and what items have limited coverage or what perils are excluded, will help you understand how your coverage works  in a claim situation.

What does home contents insurance cover?

What is contents insurance, exactly? As its name suggests, it covers the contents of your home (up to your policy limits and barring exclusions).

In short, your personal property coverage applies to the vast majority of the belongings that you store in your house. Some insurance professionals make this concept easier to understand by saying that contents insurance covers anything that would fall out if your residence was turned upside down.

While your contents insurance usually does not cover installed items — like your carpet or your water heater — your dwelling insurance probably does. But if you install a stereo system in your home, it’s likely covered under your contents coverage, even if it’s permanently attached.

Your contents insurance may also offer protections for things you store off-premises (up to a certain policy limit) and damage  to any of your guests’ belongings if they are  damaged or destroyed by a covered peril. It will not, however, cover items that belong to a tenant or roommate.

Note that your house and contents insurance only kicks in after a covered loss. So if a fire damages your couch, your policy will almost definitely provide coverage to repair or replace it. But if you spilled on it and now want a new one, a claim would be unsuccessful.

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 personal property coverage usually entails:

What is typically covered:

  • Furniture
  • Clothing
  • Electronics, including TVs and computers
  • Decor
  • Books
  • Sports equipment, including bikes
  • Dishes
  • Jewelry
  • 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 offer contents insurance in the amount of 50-70 percent of  the dwelling coverage amount that’s listed on your policy. So if you have $300,000 of dwelling insurance, you can expect somewhere between $150,000 and $210,000 of house contents insurance.

As a renter or condo owner, because you lack a dwelling coverage amount to guide your limit, you get to set your own contents insurance limit, although your carrier may indicate a required or recommended minimum.

In the event that you buy a contents insurance policy and get to pick your coverage limit, you may be best served by first creating a home inventory, or a comprehensive list of what you own. This may help you determine where you should set your policy limits.

Actual cash value versus replacement cost value

When insuring your contents, most insurance companies offer a choice between insuring your items for actual cash value (ACV) or replacement cost (RCV).  ACV coverage factors in depreciation, meaning the insurance company will pay out the item’s actual cash value determined at the time of  a covered loss. That means that if you were hoping to replace your TV from 2010 with a new one, you will be left covering a fair chunk of the expense yourself.

You do have an option to bump up your coverage level, though: you can choose RCV. This type of contents insurance pays out to replace the item without considering depreciation.

RCV can help you better maintain your quality of life after a covered loss, but it typically costs more.

Valuable item sublimits

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

Read your policy to identify any specific sub-limits. If your house and contents insurance would not be sufficient to cover some of your more expensive belongings, you can 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