Does a standard homeowners policy protect me against theft?
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Asked April 15, 2015
A homeowner’s insurance policy covers a variety of things, including the dwelling, other structures on the property, liability insurance, and personal property coverage. The personal property coverage protects your property against theft, vandalism, and other losses caused by a covered peril.
Where personal property is concerned, the two biggest obstacles to a homeowner filing a claim for theft are how to prove the ownership of the item, how to prove the value of the item, and how your policy treats the replacement of personal property.
Proving ownership and value is easier today than it has ever been in the past. Using a video recorder or even a slightly advanced cellphone, you can make a video recording of your property and submit it to the insurance company as part of your home inventory. With that on file, the insurance company can refer to the video and copies of receipts in your home inventory to determine what the settlement should be on any given piece of property.
Some homeowner’s policies pay for full replacement of lost or stolen items, while other policies pay a depreciated amount. If your policy is for full replacement, you will receive a check to cover replacing the stolen item with an identical item. If your policy is for Actual Cash Value, you will receive a depreciated amount and must pay the remainder of the replacement cost out of your own pocket. If the stolen item is starting to age a little, ACV coverage could leave you paying for most of the replacement yourself, and in that situation it may not be a good idea to waste time filing a claim at all.
Another thing to consider is how filing the claim will affect you in the future. Claims filed against your insurance will be listed in your CLUE report for a period of 7 years, and the more claims in the report, the more you will pay for future insurance policies. This is why it is a good idea to pay for the replacement of lost or stolen items out of pocket when you are able to do so, because your ability to buy future policies is based in part on how well you have managed current policies, and insurance companies are reluctant to underwrite someone with a history of filing trivial claims.
Answered April 15, 2015 by Anonymous