Insurance on personal property

hoffse · November 2016

Question for the MM board - how do you all document personal property for insurance purposes? I have kept a spreadsheet intending to list everything that's remotely valuable, but it is a couple years out of date.

I mentioned in another thread that my parents live near the SE forest fires, so they are trying to quickly document personal property in case they have to evacuate. They have been taking videos on their phones, and my mom is making a list of jewelry, art, china, furniture, etc. but they have so. much. stuff.

How do you all handle this?

On a related note - how do you handle your insurance limits on personal property? Do you only insure up to the amount you would actually need to replace the things that would be higher priority to keep your premiums down, or do you insure to replace everything? H and I currently have a rider for jewelry, silver, and musical instruments, because the limits on our regular policy wasn't high enough. However, I'm thinking of dropping the jewelry and silver riders because I don't know if I would actually replace most of it.

LillibetteV · November 2016

We're really bad - the only thing that is really documented in my engagement ring since it's on a rider. Our personal property coverage is automatically calculated by the insurer based on the value of the house and while we could raise it we were told we can't lower it, so it will actually cover everything of value in our house I think. I wouldn't replace half the stuff in our house if we had a fire though - we need to do some major decluttering!

hoffse · November 2016

I have a friend who literally lost every single thing in her house to a tornado - their house had a direct hit, and they recovered nothing. The insurance company required a list of personal property, and she struggled to remember enough items to actually receive the full value of her coverage.

She told me that creating this list was one of the worst parts of the entire experience, and she recommended creating a list preemptively.

I started one when we moved two years ago, but it's pretty out of date now, and I lost steam partway through because it took so dang long.

formerlyjessica490 · November 2016

LillibetteV said:

We're really bad - the only thing that is really documented in my engagement ring since it's on a rider. Our personal property coverage is automatically calculated by the insurer based on the value of the house and while we could raise it we were told we can't lower it, so it will actually cover everything of value in our house I think. I wouldn't replace half the stuff in our house if we had a fire though - we need to do some major decluttering!

This is us as well.

Other than that I take pictures of the more expensive things in our house along with pictures of the receipts and leave them on a USB that I keep hidden at work in case the house burns down.

brij2006 · November 2016

I don't document it and I'm an insurance agent..... So there's that.

But really, the reason I don't is because in a claims situation you go out and purchase the items you need to replace. Then you turn those receipts into insurance and they reimburse you.
Almost all of our companies, in the event of a total loss on a house, they'll cut you a check for X amount (usually $20,000) for you to replace some of the property you need right away. Then as you turn in your receipts showing you purchased those items, they release more up to your maximum coverage listed on the policy. One of our companies even writes you a check for the entire amount right away in the event of a total loss, no questions asked. They figure if your entire house went up in flames, then you have nothing and need everything, and will meet that amount anyways.

brij2006 · November 2016

hoffse said:

I have a friend who literally lost every single thing in her house to a tornado - their house had a direct hit, and they recovered nothing. The insurance company required a list of personal property, and she struggled to remember enough items to actually receive the full value of her coverage.

She told me that creating this list was one of the worst parts of the entire experience, and she recommended creating a list preemptively.

I started one when we moved two years ago, but it's pretty out of date now, and I lost steam partway through because it took so dang long.

This scenario makes me so sad. I'd be curious as to who her insurance company was at that time.

FWIW our agency is insanely picky about which companies we write with because of this. The last thing you want to do when your house was just destroyed, is have to think yourself through the entire thing and remember what all you had.

short+sassy · November 2016

I don't have much valuable property. I'm sure I could remember most things that were more than a few hundred dollars. But who wants that kind of hassle after a devastating loss? I know I should have a list/video, but I don't. Something else to add to my to-do list.

I have $40K coverage in personal property. That would more than cover the replacement cost of anything I would want to replace. To me, it's a pretty negligible savings to change personal property insurance amounts, so I don't bother. My jewelry is covered at $2500 without a rider. Including my wedding set, it might be a bit higher than that. But not by much so I don't bother with that either.

However, if I did have valuable jewelry/art/antiques/anything else where it would be a decent dent in my net worth if I had a loss...whether I wanted to replace it or not...I would definitely have a rider, as long as it wasn't crazy expensive.

I like the attitude of the one company @brij2006 is talking about. If I've been paying contents insurance for $X amount of coverage, than give me a check for that amount and don't bother me about it. If they have a problem with my insurance amount, bother me about that before there is a loss and before I've paid for X coverage this whole time.

labro · November 2016

We have a rider for valuable personal property (jewelry) because we determined the value of everything together to be over $2,500, with a separate individual rider just for my engagement ring that we uploaded the documentation on. This way, if I ever lose the ring or it gets stolen or something, we can get something of the same equivalency to replace it with - cut, color, etc.

Otherwise, our house contents are covered under our homeowners insurance, which I think was determined by 75% of our home's rebuild cost, which is fine, we don't have anything extraordinarily valuable furnishings wise, but if we did, we'd document it under our separate personal property insurance.

short+sassy · November 2016

labro said:

We have a rider for valuable personal property (jewelry) because we determined the value of everything together to be over $2,500, with a separate individual rider just for my engagement ring that we uploaded the documentation on. This way, if I ever lose the ring or it gets stolen or something, we can get something of the same equivalency to replace it with - cut, color, etc.

Otherwise, our house contents are covered under our homeowners insurance, which I think was determined by 75% of our home's rebuild cost, which is fine, we don't have anything extraordinarily valuable furnishings wise, but if we did, we'd document it under our separate personal property insurance.

This is why I dropped "last resort" Citizen's Insurance like a hot potato a few years ago. They force you to insure your contents for half the value you insure the home for.

I was dumbfounded. They cannot be serious. I would have been forced to insure my contents for 3-4x more than their worth. Like just because my home value has nicely increased with the market over the past few years means I have Faberge eggs lying around.

It wasn't like that the first year I had Citizens. No idea why it changed.

@labro, I realize you may not be forced to insure your contents for that amount. Perhaps that was just the insurance suggestion. But, in my case, I would have been.

labro · November 2016

@short+sassy To be honest, I have no idea.

I think when we switched, it was what was recommended and I'm sure we could probably change it, but in a total loss situation, I would rather have the money than not. You have to think, furniture for every room, all new replacement linens, new TV, new computer, new other tech stuff, two new wardrobes, entirely new kitchenware, dishes, all adds up.

mmabe · November 2016

We do not document at all and I probably should. I have thought about taking pictures of the more valuable items and thinking of this now, I should probably check my policy to see if certain household items are even covered with our current coverage. I'll never get this done before Christmas, but an inventory seems like a smart thing to have. I would probably do something very high level, but it would be a start. I think the most efficient method would be to take pictures of every room and closet in the house.

I represent insurance companies, but rarely handle homeowner's claims, so I don't know how.

If you want to guarantee that you'll get paid, I've always heard Chubb is the way to go. The premiums are not the lowest, but it seems to be the least hassle in getting paid for a claim.

brij2006 · November 2016

@short+sassy & @labro
A homeowners policy is a packaged policy. Most automatically include personal property at 75% of the homes' replacement cost, other types of policies (ones with actual cash value coverage on the house) usually have it at 50% of the home's value.
Labro is correct in that the personal property does add up quickly and people don't realize it. We had a client with a family of 4 in a rental house. They insisted they only needed $30,000 worth of coverage on their personal property inside the home. Well it was lost in a fire and they had to start from scratch. That $30,000 was nowhere near enough for them to replace everything they needed. Another part of the policy to look at is the "loss of use." It is usually 20% of what the home is insured for. So in these renters' situation, they had $6,000 to cover a different living situation after the fire. For a family of 4. They did 2 weeks in 2 hotel rooms until they were able to find a rental. That alone cost $4,200. 1 more week in that hotel and they would have ran out of money.
There are so many factors to a good/solid homeowners insurance policy. I know many people think agents are just ripoffs and want your money and to sell you more insurance than you need. But majority of us are trying to keep your best interest in mind. That family of 4, I knew them personally. When they had their 2nd child I chatted with them about wanting to increase their coverage so they have enough. The dad laughed at me and told me he wasn't giving me any more money and that they didn't have anything worth enough to insure for more than that $30,000.
But when you sit down and really add it all up. You have to go to the store and buy everything as you're in need, it goes quickly.
Needless to say that client now has $100,000 of personal property coverage on their renters insurance, but it took a fire claim for him to realize that I wasn't trying to take his money, I wanted to make sure he was properly protected so he could continue to provide for his family.

;-) This is my day, every day. We have a lot of the baby boomers and farmers in our community. I get the argument constantly that they don't think their 2,000 sq ft house they purchased for $75k should be insured at $200k. I'm not afraid to tell them to call a contractor and ask how much it would cost to rebuild a 2,000sq ft home, similar to theirs, in the same spot. I've had many of them make that call and come back telling me to keep their coverage as-is. We also have a cost estimation that gives us a rough estimate to replace it based on today's cost. I happily show them that and step them through how we get to that number.
It really isn't the total loss situations that get messy. Those are actually easy. Here's your check. It's the partial losses. The $40,000 worth of damage done from a kitchen fire. If you only insured that house for $75k when the replacement is $200,000, you would be in what they call in a co-insurance issue. So since the home is only insured for 37.5% of the cost to replace it, then you will be paid out a claim at 37.5%. This $40,000 claim, you receive $15,000. That may be enough to rip out the cabinets and walls and replace them, but not enough to pay to get rid of the smoke damage that happened in the rest of the house.
I'm not trying to scare any of you, but just trying to show you scenarios in where fighting your insurance may not be a good idea. Find a trusted agent that will explain things to you and tell you why you need that coverage and what it's used for. I'm a firm believer in that if I'm purchasing a product like this from someone, they need to have the heart of a teacher. I need to be able to sit down with them and ask, "why do I have so much personal property coverage? What does it cover? How would a claim work on this?" Don't be afraid to do that, and also don't be afraid to tell your agent what your plans are if your house were to be a total loss. When we first bought our house it needed a ton of repairs. So we told our agent we would take the check and buy a house out in the country that didn't need as much. So he wrote us a policy for actual cash value at an amount that wouldn't run us into co-insurance issues, but so we wouldn't have to replace the home.

smetter04 · November 2016

@brij2006 thanks for your insight! Your examples are exactly why we know we pay more for our homeowners and car insurance at our current vendor than we could if we shopped around, but we trust our agent with our lives and to keep our best interests in mind. And to us, that is worth the money.

hoffse · November 2016

I have always overinsured because like labro I would rather have the money than not. In a total loss situation you have to replace certain things quickly and don't necessarily have the luxury of waiting for a deal or sale or whatever

I imagine that if we had a total loss I would head to Target and have a very very long shopping trip through most of the store.

However, replacing things like our wedding china would not be a priority. So that's why I'm thinking I might drop our rider on some of those higher value items.

julieanne912 · November 2016

This is making me think we should document more, but when I think about it, the only things I'd be devastated to lose are things that money could not replace anyway. I feel like we could replace everything we needed with what our insurance provides. I'm going to ask H to look into what the process is for that to make sure we don't need extensive documentation anyway.

jtmh2012 · November 2016

brij2006 said:

I'm not trying to scare any of you, but just trying to show you scenarios in where fighting your insurance may not be a good idea.

I know I probably come off anti-insurance sometimes and I don't mean to. To some degree I think some of it is just designed to get more money out of you.

However, that said, I do carry a homeowners policy at whatever limits they recommended at the time and I know they make periodic adjustments. Cars are insured and I even carry a small life insurance policy through them (I have others through work, hence the small). But it seems every time I call they're trying to get me to bump my auto limits as I might hit someone's $2 million car or convert my term life to whole life.

I'm not sure if State Farm agents get paid on commission, but darn feels like it sometimes. Always trying to sell me something.

brij2006 · November 2016

jtmh2012 said:

brij2006 said:

I'm not trying to scare any of you, but just trying to show you scenarios in where fighting your insurance may not be a good idea.

I know I probably come off anti-insurance sometimes and I don't mean to. To some degree I think some of it is just designed to get more money out of you.

However, that said, I do carry a homeowners policy at whatever limits they recommended at the time and I know they make periodic adjustments. Cars are insured and I even carry a small life insurance policy through them (I have others through work, hence the small). But it seems every time I call they're trying to get me to bump my auto limits as I might hit someone's $2 million car or convert my term life to whole life.

I'm not sure if State Farm agents get paid on commission, but darn feels like it sometimes. Always trying to sell me something.

Sorry if there are any State Farm agents on here. But State Farm and Country Companies are the top 2 carriers nationwide. However, their agents have to meet certain quotas on certain types of products each year. I know the local Country agent has to sell $25,000 worth of new business premium each year in just life insurance in order to keep her contract, and her agency is in a town of 1,500 people. That's a lot of life insurance to sell and whole life is what has the highest premium, so they push it. Those are the 2 companies/agents that give many others a bad rep.
This is why so many insureds are turning toward independent agents and so many agents are getting out of captive companies like State Farm and Country Companies. Then they have the choice as the agent to offer what they feel is best for their clients. I work for an independent agency and we can write whole life insurance, but we don't promote it. It's a crap product that none of us even buy ourselves, so why would we sell it to our clients? We push term 99% of the time unless it's for estate planning purposes. I sit down with my clients once every 3 years to go over their coverages. If in that meantime they've had another child, a spouse has decided to stay home, or their net worth has increased quite a bit, we discuss where they stand as far as insurance to cover those changes. We don't have quotas or companies breathing down our backs telling us we need to push one product over another. It really helps.
I will say though that we have started to cover our ass. If I sit down and explain to someone that their auto policy with $20,000/$40,000 liability limits is nowhere near enough anymore and they refuse to increase it, then we now have them sign a statement that they were offered more coverage and declined.
It's sad but true that the amount of coverage we had 10 years ago is no longer enough in an accident. Our agency actually will not write auto liability limits lower than $100,000 per person/ $300,000 per accident. $100,000 For medical expenses to someone in an accident you caused may seem like a lot of money, but it is gone quickly if there are a couple broken limbs and any hospital time longer than a few days.
It doesn't hurt for one second to have a chat with your agent and ask them how much coverage you have and what all each one covers, and ask why you have that much coverage. If your agent isn't willing to help you understand what things cover and why they're recommending them to you, then run.

MommyLiberty5013 · November 2016

Take and email pics to myself of the house with drawers and cabinets opened. Same with jewelry and with other more expensive items.

blondie42107 · November 2016

Pictures are wonderful!

My in-laws had a farm fire. Their insurance company was great and they had no problems but the whole ordeal of remembering the inventory, etc - what a nightmare!!

short+sassy · November 2016

@brij2006, thanks for all the great information! I still think I'd be fine with $40K, it actually might be $50K, I forget which. Perhaps I'm very mistaken. But there is a lot of what I own that I wouldn't replace. All my appliances would be less than $3K. It's one bedroom of furniture and one living room, maybe $4K. TVs/computers another $4K. Jewelry $2500. That leaves $26K for clothes, books, kitchen/bathroom stuff, and knickknacks.

With the exception of Citizens, my personal property was never just automatically included in my quotes. I've always had to tell my agent how much I wanted. Then again, I'm in a high risk area and there are few players in the Property Insurance market. Including State Farm! They no longer write new policies here. They still have a lot of offices to handle their existing clientele, but stopped writing auto insurance here 15 years ago and stopped writing homeowners insurance after Katrina. They do still write life insurance. I've never heard of Country. Apparently they don't serve this area either, lol. Nobody loves us.

The first time I had to shop for property insurance, I was also hugely annoyed that I was forced to insure my home for more than its value. I hear what you (and my agent at the time) are saying, @brij2006, but if my house burned totally down, I wouldn't have rebuilt it. At the time. Because existing homes were SO much cheaper than rebuilds. However, that is at least no longer true in my neighborhood because values have risen (thank goodness). But I think I'd still take the money and run. Go buy another house and sell the land. I wouldn't want to deal with a total rebuild. Sounds like a nightmare. I never thought about a partial disaster. That makes sense.

Back then, I should have insured it for actual cash value. But I was naïve and my agent made it sound "very scary", so I took her advice and didn't. I think all my properties, except the last one, are insured for replacement value instead of ACV. I need to look at that again for the other two rentals. I think ACV might be a better option.

brij2006 · November 2016

@short+sassy I'd definitely recommend to do some more researching about ACV. If you know you don't want to rebuild, then that may be the right direction for you to go. Do know though that many agents (especially State Farm) are afraid of it. They scare people away from it because in a partial loss it can get messy if not properly insured and many agents don't want to touch that.
The only reason it's so popular in our area is because the home values are significantly lower than the cost to rebuild and most homes are old farm houses. So the house on my parents' farm is a late 1800's home with about 4,000sq ft. Half of it doesn't have electricity nor heat. The cost to replace that house is $750,000. If something were to happen to it they wouldn't replace it. So they have it insured for $100,000. However, they know if the kitchen burns they may have to fork over some money to repair it. My dad has said if it's $50k in damage or more, they won't fix it and will tear it down.
So it really depends on what your needs are. Most people with a home in the suburbs, they'll do replacement cost and it makes the most sense. It's the best bang for your buck (ACV policies have higher rates but it can be insured for less), and it makes sure you are properly insured for both total and partial losses.

mmabe · November 2016

The issue with ACV is that you don't know what the ACV of the house will be, if there were a fire or some other incident. Therefore, if you only have ACV coverage, you might not receive enough to purchase a new house. I would also be concerned, if you have a mortgage. I thought many mortgages require replacement cost coverage. Even if they do not require it, you would be on the hook for paying the difference if the ACV is less than the outstanding mortgage.

brij2006 · November 2016

mmabe said:

The issue with ACV is that you don't know what the ACV of the house will be, if there were a fire or some other incident. Therefore, if you only have ACV coverage, you might not receive enough to purchase a new house. I would also be concerned, if you have a mortgage. I thought many mortgages require replacement cost coverage. Even if they do not require it, you would be on the hook for paying the difference if the ACV is less than the outstanding mortgage.

All of this as well. I know with our companies, what you have it insured for with ACV is the max you will get paid. Despite your mortgage balance, the cost to replace the house, what the market value was of your house or how much you can buy for that amount in a different house. That is the part where people do have to weigh it and why most agents don't recommend ACV policy.
If you put $50k down on a $150k house then insured it for ACV at $100k (the amount you borrowed) and it were to burn down the next day, you would have lost your $50k investment and now have $0 to put down on replacing that home. I have so many clients who tell me how much they borrowed on their house and tell me that they only want to insure it for that much. I discuss exactly this with them. If they still insist then I explain to them what situation they could be put in if they do not properly insure their asset. And honestly, the cost difference usually isn't that much.

short+sassy · November 2016

brij2006 said:

@short+sassy I'd definitely recommend to do some more researching about ACV. If you know you don't want to rebuild, then that may be the right direction for you to go. Do know though that many agents (especially State Farm) are afraid of it. They scare people away from it because in a partial loss it can get messy if not properly insured and many agents don't want to touch that.
The only reason it's so popular in our area is because the home values are significantly lower than the cost to rebuild and most homes are old farm houses. So the house on my parents' farm is a late 1800's home with about 4,000sq ft. Half of it doesn't have electricity nor heat. The cost to replace that house is $750,000. If something were to happen to it they wouldn't replace it. So they have it insured for $100,000. However, they know if the kitchen burns they may have to fork over some money to repair it. My dad has said if it's $50k in damage or more, they won't fix it and will tear it down.
So it really depends on what your needs are. Most people with a home in the suburbs, they'll do replacement cost and it makes the most sense. It's the best bang for your buck (ACV policies have higher rates but it can be insured for less), and it makes sure you are properly insured for both total and partial losses.

At the present time, because of my 1st mortgage and HELOC available limit, it's insured close to that amount and I couldn't insure it for much less than that anyway.

But ACV would have made perfect sense for the first couple years I owned it and I wished I'd looked more into it. I had just bought it for $81K, valued at $135K...which included the land value...but was forced to insure it for $160K at $2600/year. That didn't even include liability insurance. It was just dwelling insurance. Insuring it for more in the $120K range, which is what I wanted, would have saved me $800/year. But I was talked out of it. Meh.

I know, I know. Not having liability insurance was really stupid, especially since I have tenants on one side. But I did add that when I switched from Citizen's to Lloyd's of London a few years ago.

Now the house value is $280K, the land is about $60K of that. The replacement value would probably be $200K. But I have it insured for around $240K. With liability now and the $40K contents for $3300/year. A lot more than before! But I also have a lot more coverage and would need the higher coverage to rebuy in the same area.

brij2006 · November 2016

Yes. Liability is of #1 importance. So glad to read you have that on your policy now. I've had people pay cash for a house and say they don't need insurance because they don't have a mortgage. I have to explain how important the liability portion of the policy is. Mortgage or not.

Insurance on personal property

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