Homeowners policies have a set dollar amount for the limit of personal property they will pay to replace in the event of a claim. This limit applies to normal household items such as clothing, electronics, decorations, cooking supplies, and more. If the homeowner owns items that are more exclusive or less commonly owned, they will need to take certain procedures to be sure that these items are covered properly
High-value items or items with significant rarity or sentimental value will need to be handled with care when insuring them. If we don’t take the time to get these belongings insured properly, we could end up with a payout that is far too small to recover or replace the items that were lost. Homeowners insurance policies typically have sub-limits that will come into play if the homeowner is to file a claim regarding any jewelry, firearms, art, collectibles, or other high-value items. This means that even if you have an engagement ring valued at $10,000, you may end up collecting $1,500 for it if there is a loss. Naturally, this does not sound fair or favorable. There are two main ways that we can insure our high-value items to prevent this from happening: 1) Listing these items as Scheduled Personal Property on the homeowners policy, or 2) placing the items on a separate policy known as a Personal Articles Floater.
Scheduling Personal Property on your Homeowners Policy
Scheduling personal property is a process that entails adding high-value items to a homeowners policy. Remember, a normal homeowners policy will have sub-limits that limit the amount of payout that can be received from the insurance company when it comes to specific items. You do have the option to add or “schedule” each high-value item as a line item on the policy with the monetary value listed with it. This will result in an increase in the premium for making this endorsement, but the listed item will be exempt from the sub-limit and will be replaced at the listed amount. Some folks prefer to choose this option for simplicity’s sake. Having the items added right onto the homeowners policy eliminates the need for separate policies and claims if something happens. This is also the most price-efficient option.
Personal Articles Floater
A personal articles floater, or PAF, is a standalone policy that is completely separate from a homeowners policy. These policies do roughly the same job as scheduling personal property but separates the items from the homeowners policy completely. This method of protecting high-value items has one slight drawback. If someone opts into this method, they have to attain and maintain two separate policies as opposed to having it all lumped together in one place. This can also lead to a slightly more tedious claims process if something happens that affects the home and the high-value items. While this is true, there are many upsides to using this method of protection. One of the possible benefits is the separation of claims. When it comes to insurance, the fewer claims you have, the better. Insurance companies can adjust your rate based on your claim filing history and frequency. If your high-value items are listed on your homeowners policy as scheduled personal property, any claim created in relation to that item will show up as a homeowners claim, impacting your rates for homeowners insurance in the future. If the items are on their own policy, the claims will not be counted as homeowners claims. In addition to this, personal article floater policies typically have awesome coverage options:
- Typically come standard with a $0 deductible
- Coverage is broader including things like worldwide coverage and coverage for the mysterious disappearance of the item
- There will always be a guaranteed value or agreed-upon payout amount in the case that the policy needs to be used.
Overall, which option is the best for you? Well, that decision is totally yours. Protecting high-value items is one of the most forgotten and neglected pieces of homeowners insurance. Many people have insurance policies that will not properly protect their personal belongings and either of these options is a huge step up from there. Be sure to inform your insurance agent of any valuable, sentimental, or out-of-the-ordinary belongings so they can help you to figure out which option is going to be best for you.
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