Have you bought enough home insurance? Unlike a new car, which starts losing value as soon as you drive it out of the dealer’s parking lot, the value of houses and condos often appreciate. Plus, you’re going to keep adding stuff to your home over the years, whether that’s a renovated bathroom, a state-of-the-art home theatre, or simply more stamps for your collection.
Contents insurance covers loss or damage to all the personal belongings you keep in your home, such as jewelry, clothing, appliances, electronics, art, or sporting equipment. But what many homeowners don’t realize is that even comprehensive policies limit the amount the insurance company will pay out for specific items that are lost, stolen or damaged.
As reported by CBC News, Annie and Stuart Brown lost their St. John’s, Nfld. home in a fire in 2013. While they quickly settled on an amount to cover the loss of the house, they were still arguing with the insurer over contents insurance a year later. Stuart, an archeologist, had a collection of rare items from his excavations that he says was insured for $396,000, but the insurer only offered a quarter of that amount.
It’s important to do your homework and determine what limits your home insurance policy includes. Atlantic Canada-based Anthony Insurance (part of Intact Insurance), for example, typically insures watercraft up to $2,000, animals up to $1,000 and computer software up to $1,000. For items that are lost or stolen, it covers jewelry, watches and furs up to a total of $10,000, but only up to $2,500 for each item. Lost coin or stamp collections will be reimbursed for up to $1,000, and comic book or sport cards collections up to $500. Each bicycle and its equipment is also covered for up to $500.
The Co-operators has slightly different limits: each piece of jewelry is insured for up to $4,000, with a $6,000 maximum for the entire collection. Stamp and coin collections are insured up to $3,000, and bicycles up to $4,000 each.
Aviva also has its own rules. It will reimburse damaged, lost or stolen jewelry, watches and fur garments up to $6,000, and doesn’t specify a per-item limit. It insures each bicycle for up to $1,000, collectibles such as comic books up to $5,000 per loss, coin collections up to $500 in total and stamp collections up to $2,000 in total.
While contents coverage is just one consideration when buying home insurance, make sure you think about these special limits before you sign a policy. If you’re a cycling nut who has three pricey racing bikes in the garage, don’t be content with a policy that will only pay out $500 if one is stolen.
If you inherited your great-grandmother’s diamond necklace but are otherwise happy with costume jewelry, a policy with a generous per-item limit makes more sense, even if the overall limit is lower.
Insurance companies also offer endorsements or riders, which are extra insurance policies to cover contents or incidents not included in the standard contract. Take the time to calculate the replacement costs of your valuables. If they’re over the per-item limits of your policy, decide if you want to take a risk and self-insure the rest, or if buying an endorsement makes sense.
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