When searching for home insurance in Burleson or Cleburne, people typically focus on what happens to the home itself in the event of a claim. While it is incredibly important to understand dwelling coverage, replacing your stuff quickly becomes important in the event of a major claim! In today's entry, we will explain what personal property is on your policy and how it works!
So what happens when you have a major claim on your Texas Home Insurance that is a result of a total loss? The major home insurance companies will generally cut you an immediate check to cover immediate needs like a hotel stay, toothpaste, and clothes if needed. It sounds somewhat crazy, but in the immediacy of a disaster, just having the right kind of toothpaste can bring a sense of comfort. Then the long process of reassembly begins.
While rebuilding a house is a long process that involves many choices, buying enough clothes to survive many days without doing laundry is important in the near term. It's also important to begin arming the kitchen with things like ketchup and bacon. This is where Personal Property coverage comes into play. The easiest way to think of what all is included in Personal Property on a homeowners insurance policy is to cut the roof off of a home and turn it upside down. Anything that would fall out as you shake the house is going to fall under that coverage. Kitchen appliances that are not secured to a wall or cabinet, furniture, clothes, electronics, and pantry items all fall into this designation.
So now that we've determined what is covered by personal property on a home insurance policy, what happens to it in a claim? There are two ways to settle personal property on a claim for Burleson home owners. They are actual cash value or replacement cost. Let's take a look at how each works for you.
Actual Cash Value
- If your home insurance policy is set up to cover your personal property on an actual cash value basis, the claims process will be some what simple from a process stand point. You will submit a simple inventory of items lost in the event along with an age and they will simply cut you a check for the depreciated value.
- What is a depreciated value you ask? Well that is how much an item is worth based on it's age and original value. Think about that cell phone you rocked just two years ago. Can you even sell it on E-Bay? If so, it's likely not worth much more than $25 today. So that phone that originally cost you $750 has a cash value today of $25. See where this is headed?
- This is always the cheaper of the two options as the claims payout is depreciated to the remaining value of the items involved. This always something to ask about with your current policy or a new quote.
Replacement Cost Value
- The alternative to actual cash value is replacement cost value. That means that your stuff will be able to be replaced rather than receiving the depreciated value only. To you, that means the man cave with the 4K TV can be replaced.
- How does it work when you need to make a claim? You will need to make a list of the items in your home to be replaced. At that point, you will be given a check for the depreciated amount of those items. But wait, you said I could get it replaced? At that point, as you go and purchase the new items keep the receipts. When you then submit them to the insurance company you will be reimbursed for the remaining amount.
- This is the type of coverage that we recommend for our customers. This will make sure that you can re-establish your home in a proper fashion. It will cost a bit more, but in the end you will understand if you are in a claim situation.
So which one do I need on my policy?
That's a great question. The reality is that we ALWAYS recommend that you carry replacement cost coverage on your policy. We do so because it enables you to reassemble your life in the best way possible if the proverbial stuff hits the fan at some point. In helping real people with real claims, we found that getting a check for a third or half of the cost of refurnishing your home just isn't cool. And for that reason, it really is a simple equation for us to solve.
If you aren't sure what you have today, feel free to hit us up for a review. We will make sure you understand what you do and don't have with a policy.