Special Property, Special Coverage

A standard homeowners policy offers a limit equal to half of the amount reserved for the residence to protect against loss to a given residence's personal property (ex. Your home is covered for $150,000, so your contents and furnishings are covered for $75,000). While this is generous coverage, it doesn't extend to all types of property nor to all causes of loss. Certain types of property, because of their high value and liquidity, are far more vulnerable to loss...either easily destroyed, easily stolen, or both. So, to compensate for this difference, insurers use coverage restrictions.

Theft Coverage Limitations

When a property is lost due to theft, coverage under a standard homeowner policy is severely limited (generally $1,000 - $2,500) for the following types of property:

• jewelry, watches, furs, and gemstones
• dinnerware, serving sets, trophies, and similar properties made of or plated with silver, gold, platinum, or pewter
• for firearms, accessories, and related property

Other Coverage Limitations

Several categories of property are subject to very modest limits ($200 - $2,500) of coverage, regardless of the cause of loss (theft, fire, accidental breakage, etc.). Specifically:

• money, bank notes, coins, medals, gold, silver, and platinum (other than jewelry or dinnerware)
• securities, accounts, deeds, tickets, stamps, manuscripts, passports, and similar property
• watercraft and related property including their trailers
• trailers not used with watercraft
• business property located in your residence
• business property located away from your residence
• certain types of electronic property which are lost or damaged while in a car or is located away from your home and used for business

We talked about the typical homeowners' policy containing substantial coverage limitations for certain types of property. This part concerns how to deal with this limitation.

Handling The Limited Coverage Situation

Insurance companies are happy to provide more coverage if they are paid for their trouble. Specifically, the limited range can be handled using the following methods:

Increased Coverage C Endorsement - this form is only appropriate for properties saddled with limited coverage for theft losses. This form is attached to a basic policy, and it increases the theft insurance limit (i.e. for jewelry from $1,500 to $5,000).

Scheduled Personal Property Endorsement - this form is used for increasing coverage for property that has protection reduced for all sources of loss. The property is removed from the basic policy's limits and is covered exclusively by the endorsement. This form takes more work since each item of property has to be listed and assigned a particular insurance limit.

Inland Marine Property Floater - this method works like the personal property endorsement, except that it is a separate policy. This alternative is more appropriate for persons owning substantial amounts of high-valued property. The coverage must often be purchased from specialized insurers and comes at a high cost. In order to qualify for such coverage, you may need to meet particular circumstances such as having a residential alarm system or using vault storage.

Another Advantage Of Special Handling

In order to arrange coverage under a schedule or an inland marine policy, the property must be properly valued. This often involves appraising the property. It's very helpful to have an expert source establish the current value of jewelry, furs, or other valuable possessions. In fact, such property should be appraised every two or three years since their values often increase over time.

Do you still have questions about the property that needs special handling? Talk to an insurance professional about your needs and make sure that you have proper protection.