How do I insure my personal property?
While we know that our home and possessions—the clothing, appliances, entertainment centers, furniture and other things called “personal property” are part of any homeowners insurance, what we may not know is that there are several different coverage options. Why is this important? Because the Michigan homeowners insurance quotes you get need to be based on one of the options. And they do price out differently.
There are two main options for recovery of personal property lost in a theft, act of God or other circumstance. One option is for the company to actually replace the time and the other is to provide you with a check for the actual cash value of the item. The two are somewhat different.
Coverage that includes replacement cost means your policy calls for the actual replacement of your possessions and the rebuilding of your home. The most critical factor here is to provide the correct replacement value of your home to your insurer.
Now, the insurer may have his or her own ideas as to cost, but don’t be too quick to buy into that. Hire yourself a few contractors to estimate replacement costs. Provide this information to your insurer and make sure those estimates are updated as the economy changes.
If your value is incorrect, you may end up spending your own money to augment your insurance check, should a loss occur. Realize also that when a big act of God happens—a windstorm or earthquake or wildfire—the demand for construction labor and materials goes up and so can the cost of replacing your home. Factor that in.
It’s standard that your property must be insured to a minimum of 80% of replacement cost..
The second kind of personal property coverage is actual cash value. If there is a loss you will be reimbursed its value.
Remember also that you can buy extra coverage if needed—it’s just a matter of what you need coverage for and the cost to get that coverage. Establish a good working relationship with your insurance agent from the beginning, so that you are comfortable with him or her should a claim need to be filed. Ask the agent any questions you have about coverage and don’t be too quick to set limits without considering what it might mean to suffer a loss. Theft or act of God can happen to anyone, including you.