Even though home insurance is designed to protect from significant financial loss, a standard policy often may not cover some of the more costly items kept inside a home. To fully cover items such as medical devices, antiques, jewelry, and other valuables, adding coverage through a home insurance rider is a wise investment.
Limitations of a Standard Home Insurance Policy
Every client has different valuables within their home. Thus, insurance companies limit coverage on certain categories of items, expecting homeowners to increase these coverages and tailor policies as needed. If not addressed, these “sublimits” can be troublesome for high-value items. Common sublimits on valuable personal items are below, but these limits vary based upon insurance company and state.
Coin collections: $200
Jewelry, furs, and precious stones: $1,500
Standard home insurance policies also do not cover the loss of your belongings for every reason. For example, policies cover theft of jewelry but they do not protect against the jewelry being misplaced or lost. For that protection, a floater or rider is needed.
Silver or gold: $200
Silverware, including goldware and flatware: $2,500
Valuable papers such as securities, deeds, letters of credit, etc.: $1,500
Antiques and artwork
Included in the policy, but not in a means that considers their intrinsic value. A replacement cost valuation option is better than actual cash value, but a home insurance floater is recommended. More below.
Extending Coverage to Specific Items Versus Categories
Increasing coverage in specific areas can be accomplished by adding a home insurance floater or rider. For clarity, we often hear the words “rider”, “endorsement”, “floater”, and “schedule” used interchangeably. However, the important point is not to remember terminology, but to know whether coverage applies to 1) specific items, or 2) a category of items.
1) Covering Specific Items: Floaters/Schedules
When talking to your agent, you may hear the terms “adding a floater” or “adding a schedule” or even “scheduling a floater.” These methods extend coverage to specific items, not a group of items. For example, if you need coverage for your Aunt Nancy’s $5,000 antique solid mahogany dining room table, you may add that item to the policy. Insurance companies will normally request the item be appraised so that everyone can agree on a value ahead of time. Adding a floater/schedule is usually the most cost-effective means of covering valuable items because the insurance company knows exactly what it is covering and the value is agreed upon ahead of time. This also provides the client peace of mind, knowing they will receive the agreed value if the item is destroyed.
2) Covering Categories of Items: Riders
On the other hand, riders increase coverage on categories of items, and do not name specific items. Still using Aunt Nancy’s table as an example, a rider would increase (or add) coverage for antiques for $5,000. Appraisals may or may not be needed for riders. This method is easiest for the homeowner that has many valuable items and doesn’t want to bother keeping up with each one on an insurance policy. However, it is sometimes more expensive than a floater because the insurance company is providing a blanket limit of coverage. Further, not all riders provide an agreed value. Contact your insurance agent to advise which options are best in your specific situation.
Below are other suggestions on how to protect your high value belongings.
Cause of Loss: Most floaters or riders protect jewelry against being lost or misplaced. However, polices vary and this should be verified.
Deductible: Know your policy deductibles and what they apply to. Policy deductibles may apply to a floater or rider, or a separate one may be assigned. Using Aunt Nancy’s $5,000 antique table example again, if the home insurance policy has a $5,000 deductible which also applies to the antiques floater, the table could be damaged or stolen and still not trigger a claim. Instead, it would be best for the antiques floater to have a separate lower deductible.
Valuation: Home insurance policies value contents either at actual cash value or replacement cost. Replacement cost pays according to what is needed to replace the items damaged (new for old), whereas actual cash value assigns a depreciated value depending upon its age. For valuable items, replacement cost is better, but riders and floaters can provide a third option: agreed value. With agreed value, the insurance company and the client agree ahead of time on the value of specific items, and those values are listed on the policy.
Video Inventory: Homeowners should periodically create a home inventory, valuing their contents, to ensure adequate coverage. With modern smart phones we also suggest taking a video of your home and contents each year, keeping closet and cabinet doors open, and storing the video securely in the cloud. That way, if the home or its contents are damaged, you can quickly reference the video when creating a claim.
Questions on insuring your home or valuables? Contact your Bankers Insurance agent. We will help determine your risks and advise how to best cover them. Not a client of ours? Let us earn your business! Each of our clients is assigned a personal insurance agent and provided their email address as well as a phone number that rings right on their desk.