As you look around your home, it may be difficult for you to accurately assess the value of the items you own. Therefore it could be difficult to choose the right limits for your homeowners insurance policy contents coverage. In order to more accurately assess the value of your property, follow these steps:
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- Determine whether your policy provides replacement or actual value: Your home insurance policy can pay for damages to contents in one of two ways. It may give you replacement value for your damaged property which means that you will be given an amount that should allow you to buy a comparable replacement item in a retail setting. Or your policy may pay actual value which means your insurer will attempt to put a value on the actual item lost, factoring in its age and depreciation, and reimburse you that amount. Replacement value will give you a higher dollar amount per item and may also result in higher insurance limits.
- Review your receipts: Your receipts tell you how much you paid for each of the items in your home. While you might not have the receipts for every knick-knack ever purchased, look through your documents to see if you have the receipts for some of your big ticket purchases. Use them to help you identify what a comparable product price would be if you have replacement value or to help determine the starting point for the actual value of the item lost.
- Get an appraisal: Some items aren't easy to value. This includes certain jewelry, art and antiques. Bring these items to a professional appraiser who can estimate the actual value at the time you bring them in and give you a certificate for that amount
- Complete your home inventory: It’s impossible to properly value all your contents if you don’t even know what they are. Completing a home inventory consists of listing every item in every room of your home. This can be an invaluable tool for determining an appropriate limit for your policy and for later submitting claims.
- Keep the emotions out of it: Your stuff may have a high emotional value to you, but an insurance company can never make you emotionally whole after an insurable incident. Their goal is to focus on something objective—financial value—and make you whole in that respect, so you must stay focused on dollars and cents when trying to find the right limit for your contents coverage.