A standard homeowner's insurance policy provides a policyholder with coverage for the structures on his property, personal belongings, liability for injuries or damages suffered by third parties, and expenses to secure living arrangements for any period during which his residence is uninhabitable. If a covered event destroys or damages a policyholder’s personal property, or if the property is lost or stolen, the person’s homeowner's insurance pays to replace the items after the homeowner provides proof of ownership to his insurance carrier.
A typical homeowner's insurance policy provides coverage for a homeowner’s personal property in an amount between 40 percent and 70 percent of the amount of coverage extended to the policyholder’s residence. If, for instance, a homeowner's policy covers a residence for $100,000, the policy also insures the homeowner’s belongings for a corresponding dollar amount between $40,000 and $70,000. As long as a policyholder doesn't refuse off-premises coverage when entering into his homeowner's insurance contract, his policy insures his possessions against damage, destruction or loss anywhere in the world.
A homeowner's policy provides coverage for a policyholder’s valuables such as jewelry and silverware but normally limits coverage for such items to a total between $1,000 and $2,000. Adding a rider or endorsement to the homeowner's insurance gives a policyholder additional coverage for his expensive belongings.
Actual vs. Replacement Value
Homeowner's insurance pays to repair or replace a policyholder’s lost, damaged or destroyed possessions at either their actual or replacement value. If a policy pays to replace an item at its actual value, the homeowner’s insurance pays an amount equaling the current cost of the piece minus an allowance for depreciation. Comparatively, if a policy pays to replace a homeowner’s couch at its replacement cost, the policy pays the current market value for a new, comparable couch.
Proof of Ownership
A policyholder generally establishes proof of ownership for his personal property before a damaging or destructive event occurs. In other words, a policyholder takes inventory, pictures and videos of his belongings to demonstrate his ownership of them when entering into an insurance contract. During the life of the contract, a policyholder retains receipts, warranties and owners’ manuals from new purchases and proof of valuable gifts he receives. For items specifically insured by a rider or endorsement, a policyholder secures current appraisals on a regular basis.
If a homeowner lacks sufficient proof that he owns a damaged or missing piece when making a claim, his insurance carrier may accept a canceled check or credit card statement evidencing his purchase of a particular item. If the policyholder received a gift from a friend who subsequently lost the receipt for the item, the insured’s carrier may acknowledge the friend’s written testimonial as proof that the insured owned the item.
Ideally, a homeowner stores documentation of her personal property in a fireproof safe, a safe deposit box or with a trusted confidant who lives off-site to ensure her proof of ownership remains readily available if she needs to file an insurance claim.