Your home, condominium or tenants (renters) insurance policy brings together a variety of coverage types, including coverage for your belongings. Among your belongings, you may have some items that are worth considerably more than others, which means you may want a special type of coverage for these items.
The role of sub-limits on your insurance coverage
A standard home insurance policy has both broad limits and sublimits. An example of a broad limit would be your coverage limit for personal property, meaning your belongings. On many policies, the default limit is set at a percentage of your home’s insured value.
Let’s say your home is insured for $500,000. In this example, your coverage limit for personal property might be $250,000. But that figure may not apply to everything in your home. Sublimits can reduce coverage for specific categories of items, such as electronics or jewelry. For instance, jewelry might have a coverage sublimit of $2,500. This means that if you have a $5,000 diamond ring, that ring isn’t fully insured by the policy.
Insurers use sublimits to keep coverage more affordable for a wider range of consumers. After all, not everyone has a $5,000 ring. To expand coverage for the ring (or any other valuable) to the full value of the item would mean other policyholders in the insured group were subsidizing coverage for the valuables others own. Insurance works like a pool, transferring risk from the individual to the pool of insured policyholders.
Instead, insurers use sublimits with the option for each policyholder to buy specific coverage for items that may be worth more than average.
Full value coverage for valuables
Though they use different names different names for the coverage, many insurers offer one or two ways to protect your most precious items without sublimits. In both cases, you specifically insure the item — or several items — to full replacement value. Insurers may refer to either solution as scheduled coverage.
– Personal articles rider: A rider is an add-on to your existing policy that changes how your coverage applies.
– Personal articles policy: A personal articles policy is a standalone policy that can be used to insure valuables independent of your home insurance policy.
In both cases, you can insure your most precious belongings to their full value. As an added benefit, you’ll enjoy wider coverage for additional risks not covered by a standard home insurance policy. You’ll also benefit from deductible-free claims if you do have a covered loss.
Discuss your insurance coverage needs with your broker
Scheduled coverage allows you to focus your coverage where you need the most protection. Your most valued possessions may merit the extra investment of premiums. Contact us to discuss your insurance options or to learn more.
