How to Determine Insurance Values for Your Belongings
Over the years, people collect and invest in many different valuable items, ranging from homes to cars to jewelry and antiques. However, because unforeseen disasters or accidents can damage or destroy these valuables, getting your most precious possessions insured is a good idea.
Since a person's home, car and jewelry are typically his or her most valuable items, this article will focus on evaluating and appraising these three items for the purposes of insurance valuation.
Homeowners' Insurance
Insurance values vary by item and company policy. However, most insurance companies will consistently cover some items and situations. For example, a homeowner's insurance policy will usually cover:
- damage to property from a fire
- damage done by the elements (not including flooding)
- the extra cost of living
- theft.
In most cases, homeowners' insurance covers the structure of the home and the occupant’s personal belongings.
Insurance Valuation for Homes
A home and its occupants' belongings can be insured according to a few different methods, including:
- Actual Cash Value, that covers the cost of replacing a home minus the cost of depreciation
- Extended Replacement Cost, that covers costs up to a certain limit. This type of homeowners' insurance offers protection against a sudden increase in construction costs of newer homes.
- Replacement Cost, that pays the policyholder an amount comparable to the cost of replacing the damaged property without deduction for depreciation. This type of homeowners' insurance is limited to a maximum dollar amount.
Factors That Determine the Value of a Home
A home is insured for the total amount it would cost to rebuild the home. If there is not enough insurance, the policy may only pay a part of the cost to replace damaged items or to rebuild.
Factors that determine the value of a home include:
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attached garages, fireplaces and other special features
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cost of construction
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location of the home
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number of rooms and bathrooms
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square feet of the home
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style of the house
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type of exterior wall construction
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type of roof.
Tips for Insuring Personal Belongings
In addition to insuring your home, you may want to get insurance for some of your most valuable personal belongings, including your precious jewelry and antiques. To start the process, make an inventory of everything you own in your home and in other buildings on the property.
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How to Document Inventory
Documenting inventory can help you make the most of your insurance policy. Should damage occur, videos or pictures of your valuables in their original state can help insurance agents determine how much each item is worth and, therefore, how much should be paid back to you to replace it. Here are some tips on how to document your inventory:
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Take either still or video pictures and keep receipts with the inventory.
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Store the inventory and all records in a place separate from your home, such as in a bank safe deposit box or a family member's home. If your home is damaged, you want your inventory to be safe.
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Update the inventory whenever you make new major purchases.
The most important thing that can be done to safeguard a home and property is to understand what an insurance policy is and what it contains. Remember, you need to renew policies every year to retain the best coverage. |
Write down all major items. For each item, record:
This information is essential to getting an accurate insurance valuation so that, in the event of disaster, you will be fully covered and reimbursed for the value of the lost items.
Once your valuables are insured, be sure to check the limits and terms of your policy. Know when the policy expires and when you have to get your valuables re-appraised to update your insurance policy.
Insurance Valuation for Cars
An automobile's insurance value is determined by comparing your car's condition to similar vehicles. This may mean that insurance agents will need to examine records from:
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local auto dealers
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private parties
- recent sales of similar cars.
Other factors that affect a car's value are:
- how the car is equipped
- the car's condition (whether the car has endured body damage or accidents)
- the car's mileage.
Insurance Valuation for Jewelry and Valuables
Most homeowner insurance policies limit the amount of coverage for items such as:
- antiques
- furs
- jewelry
- silver.
Since the average value of most of these items goes beyond the set limits of insurance policies, many people choose to get extra insurance that will specifically cover these valuables.
A "schedule" is a listing of valuable of items on a homeowner’s policy. The "schedule" includes a brief description of each item and its dollar value. For some items, a professional appraisal or a copy of the sales receipt may be required so that the "schedule" accurately reflects the value of an item. This added coverage is very affordable.
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