What Does Homeowners Insurance Really Cover?

Does my homeowners insurance cover special items, such as jewelry and art, or do I need extra coverage?

Most homeowners insurance policies cover jewelry, art and collections the same as any other possession, subject to your policy’s deductible and coverage limits. For example, most homeowners policies limit coverage for possessions to up to 75% of your dwelling coverage. So if you have a policy that provides $100,000 in coverage for your home, you’d also have no more than $75,000 in coverage for all of your possessions. And the policy may cover only the depreciated value of the items, not the replacement cost -- and that can make a big difference with something like antique furniture, which can appreciate with age. Coverage for certain kinds of items, such as jewelry, is typically limited to a total of $2,000 to $3,000, unless you buy separate coverage for each item.

Although items may be covered for fire damage or theft under your general policy, they may not be covered for breakage, mysterious disappearance or theft from a location other than your home, such as your car.

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But you can buy special coverage for certain valuable items (referred to as “scheduling it separately”), which can eliminate the deductible and add coverage for breakage, mysterious disappearance and off-premises theft. Scheduled items are insured for their appraised value -- the cost to buy the item at retail -- rather than their depreciated value. Have these items re-appraised occasionally to make sure you still have adequate coverage. Plus, some specialty insurers, such as Fireman’s Fund and Chubb, can add up to 50% beyond the coverage limits if the price of an insured item has increased since it was last appraised.

Look at the price per $1,000 of insured coverage when deciding whether it’s worthwhile to insure the items. The cost to cover a piece of art can range from 90 cents to $2 per $1,000 of insured value, for example; coverage for jewelry tends to cost more. You may get a discount if you have a home security system or keep your jewelry in a safe. Consider buying special coverage for individual items worth $10,000 or more. Or get blanket coverage for an entire collection, rather than buying coverage for each item separately.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.