What is the True Value of Your “Contents”?
by R&I Consultants
If you own a home, then it is probably your most valuable possession. Along with the actual foundation of your home, most likely everything you own is inside of it. That’s why it is important to have contents insurance along with homeowner’s insurance in Atlanta. This insurance pays for damage to, or loss of, an individual’s personal possessions located within that individual’s home.
Could you imagine the cost of replacing every single item in your home if it were destroyed in a home fire or flood, or if they were stolen in a break-in?
The best way to know how much contents coverage you need is to perform a home inventory, which can be created as a video, or a list with photos and receipts or other proof of ownership. Unless otherwise specified, the amount of contents coverage is automatically calculated between 50 to 70 percent of the dwelling coverage limit. You might decide to purchase more depending on the value of the personal belongings in your home.
A home inventory serves two very important functions:
1. It allows you to calculate the value of your possessions to ensure you are purchasing an adequate amount of contents coverage.
2. It serves as proof in the event of a disaster (like when you need to show your home insurance company that you really owned that 50” HD flat screen TV and $10,000 oriental rug that you are claiming).
After investing your effort into creating a thorough inventory, what else can you do to make sure you are able to replace your belongings after a loss? Make sure you ask your agent to quote your policy with Replacement Cost Valuation. This is the amount it would cost to repair or replace an item with one of the same kind and quality as the original in today’s market.
Replacement Cost Value is very different than the Actual Cash Value of an item. Here’s the difference:
You own a five-year-old TV, and you paid $5,000 for it. The expected lifespan of a TV is 10 years. Each year, the value of the TV decreases by some amount, let’s say $250. Because the TV is five years old, its value is now $3,750.
Get it? Then, apply this example to everything you own. From shoes to cookware to books to electronics to furniture, what would it cost to replace everything in your home?
In future posts, we will discuss the special coverages needed for specific items like jewelry, furs, guns or art. In the meantime, get your camera and a notebook and start making your inventory!
For more information on how you can protect your contents with homeowner’s insurance in Atlanta, call us at 404-459-5975. Also, remember to follow Risk & Insurance Consultants on Twitter!