When you buy homeowners insurance, you will want to include contents coverage within your policy. This coverage is designed to help you protect yourself from excessive cost burdens following losses to your essential possessions. Under your household’s contents coverage, you will have this help available. However, contents coverage alone is not necessarily the coverage that is perfected for you. Sometimes, it will not provide you with a full settlement for all the belongings in your care.

As a result, it is often necessary to see if your contents insurance offers replacement cost coverage. Though not automatically included in many policies, you can often add it to your benefits as an endorsement. By doing so, you will often find that you have much better coverage for important items.

Understanding Contents Insurance

Homeowners insurance plans offer coverage for both the dwelling itself and for the contents inside in case of unexpected or unavoidable accidents on your property. Therefore, you have protection for your belongings in case of hazards like:

• Fires
• Theft
• Vandalism
• Weather Damage

Protection against other, more specific losses, can also be added to your policy in many cases.

Often, your contents policy will insure most items in the home, from furniture to clothing, electronics and other essentials. One notable exception is business materials housed in the home.

However, where these policies will limit coverage is in how much they will pay for certain items. One of the ways they might do so is by placing actual cash value limits on claims. By paying for losses based on items’ actual cash values, the policy only agrees to send you money for the used value of that item, which is not necessarily the value of a brand-new item.

To get contents coverage that reflects an item’s like-new value, you will need to see if you can add replacement cost coverage to your possessions insurance.

Replacement Cost Contents Insurance

You can often achieve replacement cost contents insurance by adding it to your home insurance as a policy endorsement. Once you have this coverage, your insurer will calculate your settlement based on the like-new value of qualifying items. Therefore, you are more likely to receive a higher settlement, which can often help you better recoup your property losses.

However, just because you have replacement cost coverage on your policy, you are not guaranteed to receive 100% reimbursement for all your claims. Deductibles will apply to most claims, and policies might also place a maximum limit on what it will pay for certain items, such as jewelry or electronics. Still, you might also be able to specifically insure items such as jewelry, using a scheduled items rider. This will supply much more extensive coverage on those items of value.

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