Insurance Term of the Day: Personal Property Insurance Coverage

What is personal property insurance on a homeowners policy?

Also discussed: What is the difference between named peril and open peril homeowners insurance?

There are multiple aspects that make up our insurance policies. We may not fully understand each section of the contracts made with our insurance carriers. However, it’s important that we learn and understand what the contract specifies–it includes our coverages and limits. That way, if we must file a claim, we will know what the insurance company will and will not cover, based on the agreed contract.

Have you ever heard of what’s called personal property insurance on your homeowners policy? What is it?

Personal property insurance covers your your valuable possessions or assets, other than the home itself, very simply put. The details of the coverage are not so simple, though.

Not only does this insurance provide coverage for items inside the home, it can provide coverage for your property outside of your home too. From destruction of property, a fire causing a loss, to a thievery, the coverage depends on what type of policy you have.

There are two common forms of homeowners policies.

Named peril: The standard homeowners policy is called an HO2, which provides open peril coverages. Named peril means that the policy explicitly names specific coverages provided by the policy by name. That which is not covered is completely excluded from the policy. Unless the peril is specifically listed, there is no coverage. Some of the common perils on this homeowners policy includes the following :

  • Fire
  • Theft
  • Vandalism
  • Explosions
  • Falling objects
  • Lightning
  • Hail
  • Smoke damage
  • Wind
  • It’s important to remember that these specific things are not always included in your policy, and there are usually more inclusions listed on the policy. This is just naming a few. Every policy will vary, depending on your insurance company.

Fun Fact: Your homeowners policy has strange occurrences included in the policy, such as volcanic eruptions near your home, or damage caused by a crashing aircraft. Although these incidents are not extremely common, it’s good to know you’d have coverage if this did happen to you!

Another type of homeowners policy is called all other perils. This is essentially the opposite of named peril. There is coverage provided for your belongings by any kind of damage–except the damages explicitly excluded on your policy.

Specific exclusions could be:

  • Earthquakes
  • Floods
  • Mold
  • Pet damage
  • Corrosion
  • Natural wear and tear
  • There are typically many more listed, this is just naming a few of them.

Each insurance policy will list the specific coverage limits and your deductible amount, which plays a role in how much you will be paid out on a claim.

By: KayLynn P.


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