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If you carry renters insurance you are well aware of the fact that the most important aspect of the coverage you are paying for is the personal property coverage. Personal property insurance covers all property not permanently attached to the property in question, either a home or apartment. The other major components of renters insurance include loss of use insurance, which provides compensation for the cost of living elsewhere while your apartment is being repaired. The other is personal liability insurance, which provides for the payment of loss due to someone being injured while on your property or any actual property loss that the third party may have experienced.

Personal property insurance is the largest component of coverage, generally speaking. The most important thing to remember is that the coverage is not a “blanket” policy, which means that only some items may be covered. Antiques or rare items may be excluded; things like family heirlooms might not be covered as they have no “cash” value per se.

The other factor that must be studied is the level and type of valuation that is used for example, replacement cost is one system. This type of coverage will provide the amount of money needed to replace the item at its current retail price. Actual cash value would only provide the amount that the insurance company determines the item was worth, less depreciation and any deductible that might apply.

This would mean that your refrigerator might only be covered for $200.00 when it would cost $700.00 to re-purchase it because it is over 7 years old and inflation has raised prices dramatically. Cash value policies should have lower premiums generally and might be appropriate for situations where the personal items are less important or easily replaced. This should be carefully considered when choosing personal property coverage.

There are two fundamental types of property insurance, open perils and named perils. The first type, Open Perils, is a general coverage policy and this type of insurance covers against any type of damage to property regardless of the cause of the damage. The one exception is that coverage is not provided for causes that are explicitly excluded in the policy.

There are a number of causes or possible risks that are generally excluded in most Open Perils type of policies. One of the most recognized exclusions is floods. Many homeowners are well aware that if you are in a flood risk zone you need to have separate flood insurance. The logic behind this is basic, common sense. Why should all homeowners pay for the coverage when only a few are at risk? A true Open Perils policy that would cover all risks with no exceptions would be prohibitively expensive.

Another example of an uncommon risk is earthquake. Flooding is something that can happen anywhere but generally is more common in certain areas. Earthquakes happen only along known fault zones and if you are not living in one of them, you should not be paying for the risk of the impact and destruction an earthquake can bring.

There are others that might seem extreme but which represent real threats as well, such as acts of terrorism, war, nuclear incidents that are not related to war or terrorism, among a few others. You might live near a nuclear power plant and would be well advised to maintain insurance against the possibility of a radiation leak. These special or uncommon risks are covered under special, Named Perils policies. This is how the cost of risk is controlled.

Renters and homeowners insurance are two examples of policies that include personal property coverage. There are others that are used to cover specific items such as antiques and collectible items but almost all families have some form of personal property insurance. Renters insurance is much more associated with this type of coverage. This results from the fact that for the renter, the domicile is not covered directly, but the property of the person living there is.

In the case of homeowners insurance the amount of coverage is usually a percentage of the actual value of the home. This is usually in the range of 40% that means that if the home is worth $180,000 the maximum property coverage would be $72,000. This does not mean that you would automatically receive that amount in the event of a total loss.

All homeowners and renters insurance provides for personal property coverage automatically. What is not automatic is the amount of coverage and what can and cannot be claimed. To illustrate, the two classes of personal items that are most likely to not be covered are rare or antique items and outdated items. If you have a great deal of antique furniture you might find that the insurance company will only pay the amount estimate to replace the furniture with modern, equivalent items and not the value you estimate for them.

This would also include any item that is considered difficult or impossible to replace. Any item that was outdated or non-working would also be excluded from compensation. Always check the details of any policy before you commit.

Cash is never covered under any form of insurance and this includes personal property insurance and almost all other types of coverage as well. leaving a gap in the property of someone. While this is general knowledge, what is not known is that bearer bonds are included in that exclusion. Most people do not have bearer bonds on hand or stored in their homes, but there are some that do believing the insurance will cover their loss f there is one.

A bearer bond is a security that has a cash value that is payable, on-demand, to the bearer of the instrument hence the name “bearer bond.” While this may never be an issue for most homeowners, there are a number of items that standard personal property insurance does not cover.

Items that the average homeowner might need to consider would include jewelry, silverware and coins and collectibles. All too often after a disaster the average homeowner finds out that the stamp collection that has been in the family for generations is lost forever and the insurance company does not cover the loss.

Silverware is often overlooked and while the silver that its constructed of can be salvaged the value of the silverware is not covered. Jewelry is also something that should be carefully considered. These items can represent tens of thousands of dollars of investment and should be covered by special personal property insurance policies.

Other examples of this are cameras, firearms and musical instruments, among other items. The piano in the living room will not be covered unless you specify it or purchase a policy that covers that class of possession. Careful planning can save a great deal of hardship when the unexpected happens and this is why personal property insurance exists.