Paul Sanchez
Homeowners insurance covers theft of personal belongings both inside and outside of the home, including theft from a car or storage unit, and items stolen while travelling. However, there are limitations and conditions to be aware of. For example, coverage for expensive valuables like jewellery, firearms, and collectibles may be limited, and most policies have a vacancy clause that voids theft coverage if a property has been vacant for more than 60 consecutive days. The reimbursement amount for stolen items depends on the type of coverage and loss settlement provisions in the policy, with some policies offering actual cash value (ACV) and others offering replacement cost value (RCV).
| Characteristics | Values |
|---|---|
| What does homeowners insurance cover in the event of theft? | Personal belongings inside and outside of your home, including items in storage units, cars, or hotels. |
| What does homeowners insurance not cover in the event of theft? | Theft of your actual vehicle, unreported theft, theft by a named insured, theft while the home is under construction, and theft while the homeowner is living elsewhere full-time. |
| How much does homeowners insurance cover in the event of theft? | Coverage depends on the type of policy and the value of the stolen items. Policies may cover the actual cash value (ACV) or the replacement cost value (RCV) of the items. |
| What should you do in the event of theft? | Contact the police to file a report, then file a claim with your insurance company. |
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What You'll Learn
Personal property coverage
In the event of theft, personal property coverage will pay you the actual cash value (ACV) of the stolen item, which is the depreciated value at the time of theft. Many insurers also offer the option to purchase replacement cost value (RCV) coverage, which reimburses you for the full cost of replacing the item without factoring in depreciation.
It's worth noting that personal property coverage has limits and exclusions. High-value items such as jewelry or collectibles may have coverage limits, and you may need to purchase additional coverage or specialized insurance for full protection. Additionally, damage caused by floods or earthquakes is typically not covered by basic homeowners insurance policies, and separate endorsements may be required for protection against these perils.
To ensure you have adequate coverage for your personal belongings, it's important to review your policy carefully and understand what is included and where additional protection may be needed.
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Limits of coverage
The limits of coverage in homeowners insurance for theft depend on several factors, including the location of the stolen property, its value, and the type of loss settlement chosen. Here are some key points regarding the limits of coverage:
- Location of Stolen Property: Coverage limits may differ depending on whether the theft occurred on or off the insured premises. Some insurance companies offer full coverage for theft within the home, while providing limited coverage, typically around 10% of the personal property coverage limit, for thefts occurring outside the home. This includes items stolen while travelling or stored off-site, such as in a rented storage facility.
- Value of Stolen Property: Homeowners insurance policies typically limit the coverage for extraordinarily valuable items. The definition of "valuable" may vary across insurance providers. To increase coverage for valuable items, endorsements can be added to the policy. For example, a jewelry endorsement can be purchased to increase coverage for jewelry items.
- Type of Loss Settlement: The method used to value stolen items can affect the payout received. There are usually two options: Actual Cost Value (ACV) or Replacement Cost Value (RCV). ACV considers the depreciated value of the item at the time of theft, while RCV covers the cost of purchasing a new, comparable item without factoring in depreciation. RCV usually requires an additional cost and may result in a higher payout.
- Deductibles: Regardless of the type of coverage chosen, the policyholder is typically responsible for paying a deductible. This means that the insurance company will reimburse the item's value minus the deductible amount.
- Policy Limits: The maximum coverage limit for personal property is typically set as a percentage of the overall insurance limit on the structure of the home. This percentage can vary, but it is often between 50% to 70%. For example, if the insurance limit on the structure of the home is $200,000, the coverage limit for personal property may be up to $140,000.
- Exclusions: It is important to note that homeowners insurance does not cover certain types of property, such as vehicles. Car theft, for instance, is typically covered by comprehensive car insurance rather than homeowners insurance. Additionally, cash stolen from the home may have limited coverage, with some insurance companies providing a maximum reimbursement of $200 for stolen cash.
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Actual cash value vs replacement cost value
When it comes to homeowners insurance, there are two main ways an insurance company can value stolen items: actual cash value (ACV) and replacement cost value (RCV). The method used will affect the amount of payout received on a claim.
Actual Cash Value
Actual cash value is the cost of replacing an item minus depreciation, or how much the item has decreased in value since the day it was purchased until the day it was lost or stolen. In other words, if your belongings are stolen or damaged and you file a claim, your insurer will factor in the property's age or physical condition to determine the reimbursement amount. For example, if a pipe bursts and floods your basement, damaging furniture you purchased five years ago, an insurer with an actual cash value policy would reimburse you for the value of the furniture set after deducting five years' worth of depreciation from its current replacement cost. Most home insurance policies cover belongings, like TVs or laptops, at their actual cash value by default.
Replacement Cost Value
A policy with replacement cost value covers what you would have to pay to replace everything with a newer version at today's prices. For example, if your laptop is stolen and you make a theft claim with replacement cost value personal property coverage, the insurer would reimburse you for whatever a new version of your laptop costs today. Many insurers allow you to purchase replacement cost value coverage for an additional cost. Because this coverage is more comprehensive, you will likely be charged a higher premium.
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High-value items
Homeowners insurance typically covers the theft of personal belongings, whether they are in your home or elsewhere. However, there are often special limits on certain types of high-value items, such as jewellery, watches, firearms, cash, electronics, and artwork. These limits can range from $1,500 to $2,500. If the value of your high-value items exceeds the coverage limit, you can purchase additional coverage or a separate endorsement, known as a "floater", to fully protect these items. Keeping your high-value items securely stored, such as in a wall safe or bank vault, can help reduce the cost of insuring them.
In the event of theft, it is important to first file a police report, as insurance companies will deny claims without an official report. You should then contact your insurance provider and provide as much information as possible about the stolen items, including make and model, purchase price, and age. To support your claim, you may need to provide documentation such as receipts, photos, videos, or appraisals to prove ownership and value.
To determine if you have adequate coverage for your high-value items, it is recommended to create a detailed inventory of your belongings, including descriptions, purchase dates, and original costs. This will help you approximate the value of your personal property and identify any gaps in your coverage. Additionally, reviewing your policy regularly and staying up-to-date with any life changes can ensure that your insurance coverage meets your needs.
When dealing with insurance companies, it is important to be aware of potential challenges. Insurers may use outdated pricing guides, apply excessive depreciation, or argue for similar but less expensive replacement items. Having a property damage lawyer can be beneficial in these situations, as they can guide you through the claim process, challenge the insurer's tactics, and work to establish the true value of your loss.
Overall, while homeowners insurance provides coverage for theft, it is important to understand the limits and exclusions of your policy, especially when it comes to high-value items. By taking proactive measures, such as secure storage and comprehensive documentation, you can better protect your valuable possessions and ensure a smoother claims process in the unfortunate event of theft.
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Unoccupied homes
Home insurance policies typically cover theft, including theft damage to the home and theft that occurs away from home. However, most home insurance policies have a vacancy clause that voids theft coverage. If your property has been vacant for more than 60 consecutive days, you may not be able to file a claim for theft.
In an insurance contract, vacant and unoccupied mean two different things: a vacant property has no belongings or people living in it, while an unoccupied property only lacks people. For example, when you go on vacation, your home is considered unoccupied because all of your furniture and personal belongings are still there.
If you reside somewhere other than the insured house for more than two months, your insurer may deny your claim if the unoccupied home is burglarized. In this case, you may need to get unoccupied home insurance for theft protection while you're away.
It is important to note that even if you have unoccupied home insurance, there may be some limitations to your coverage. For example, theft of trailers, campers, or watercraft not on your property is typically not covered by standard homeowners insurance policies. Additionally, if you rent out a room in your home and it is burglarized, your insurer likely will not pay to replace the tenant's belongings. That would fall under their renters insurance policy.
To ensure you have adequate coverage for your belongings, it is recommended to conduct a home inventory and evaluate whether you need to increase your coverage limits. A home inventory is a list of every item you own, and it can help you determine if you need additional coverage for high-value or antique items, as standard policies may not fully cover all valuables.
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Frequently asked questions
Homeowners insurance covers the theft of personal belongings both inside and outside of your home. This includes items stored off-site, such as those in a rented storage facility. Coverage for personal items stolen while away from home is typically limited to 10% of your personal property coverage.
There are two ways an insurance company can value stolen items: actual cost value (ACV) and replacement cost value (RCV). ACV is the depreciated value of an item at the time it was stolen, while RCV covers the value of the item without factoring in depreciation.
First, contact the police to file a report. Then, file a claim with your insurance company as soon as possible.
There are several factors that may prevent your theft claim from being approved. These include:
- Unreported theft: Failing to file a police report or waiting too long to submit a claim may result in your claim being denied.
- Theft was committed by a named insured: If a named insured individual commits the theft, the claim will be denied, and fraud may be suspected.
- Theft occurred while the home was under construction: If the home is under construction and unoccupied, theft may not be covered.
- Theft occurred while living elsewhere: If you reside somewhere other than the insured home for an extended period, your claim may be denied.
To ensure adequate coverage, it is recommended to conduct a home inventory and evaluate whether you need to increase your coverage limits. A home inventory is a list of every item you own, which can help you determine the coverage you need and prepare for the claims process.
