How Much Personal Belongings Coverage Do I Need for Home Insurance?

Personal belongings coverage comes with most home insurance policies, but not all coverage is created equal. Your insurance needs may be different than your neighbor’s, meaning you need a policy tailored for you and your items. 

The amount of personal belongings coverage you need depends on two key factors: 

Value of the Personal Belongings 

The amount of personal belongings coverage you should purchase depends on the value of your items. Items with a higher value will generally need more insurance. Some expensive items may have limited coverage under a basic policy and should be covered under additional floater policies such as jewelry, furs, art and electronics.  

Also keep in mind that the value of your belongings may change, which is when you may want to change your coverage. If you purchase an expensive television, for example, you may want to check your policy to make sure the new television is covered. 

In some cases, you may choose lower amounts of coverage if the value of your belongings is not substantial or if you have an easy means of replacing the items. For most homeowners, however, home insurance is necessary to cover the items within your home. 

Type of Policy 

There are two main types of policies when it comes to personal belongings coverage: actual cash value and replacement cost value. This references how compensation will be paid when you have to file a claim on your home insurance policy. 

Actual cash value policies provide compensation for loss of or damage to your personal items after accounting for depreciation. This means that as the value of your items drops, so does the amount of compensation you can receive when it comes time to file a claim.  

Replacement cost value policies, on the other hand, provide compensation for loss of or damage to your personal items without counting depreciation. This will allow you to replace your lost belongings with one of similar or identical value. These types of policies are generally more expensive but may allow you to easier replace your belongings after a claim. 

In general, it is recommended that you carry enough insurance to cover the replacement value of your items. The value of your items may change, however, so it is important to update your home insurance policy when necessary.