When you buy a home insurance policy before moving, you will see that the coverage is broken up into dwelling and structures and contents. The contents coverage in your policy is referring to your personal belongings like furniture, electronics and clothes. But the specifics of your contents coverage are even more detailed than that.

TUTORIAL: Intro To Insurance

Contents Coverage Covers Jewelry and Valuables
If you have no other insurance for them, then your contents coverage will cover your jewelry and other valuables. But remember: you have just one limit on the contents coverage of your policy. If you have extremely valuable jewelry, art or other collectibles, then you may want to work with your insurance agent before you move and get your valuables valued for insurance purposes, and then have them covered either by special certificates or other policies so that your contents coverage offers sufficient benefits for claims caused by the loss of your other personal property.

The Tangible and the Intangible
Your contents coverage doesn't just provide insurance protection for the things in your house that you can see and touch, it also provides protection for your intangible property like MP3s, applications and downloaded software. As with any personal property, you must prove that you owned the intangibles that you claim, what you paid for them and that you lost them before you will be reimbursed. If you've purchased the intangible electronic data from a company that allows you to re-download it, then you would not be reimbursed.

Replacement Value Vs. Actual Value
Your policy can call for you to be reimbursed an amount equal to either the actual value or replacement value of the items. Replacement value is the amount that it would take for you to replace the lost item, whereas actual value is the amount that the item, with wear and tear, would be worth. Actual value might not give you enough money to replace an item, since replacing it usually means buying it again at the new retail price.

The Bottom Line
The goal of any insurance policy is to make you whole after a loss, not to help you to profit from one. Your contents coverage will help to ensure that you get reimbursed an amount that you are entitled to receive, and can prove that you are owed. But, it will only provide benefits up to the limit on your policy, and anything lost that doesn't exceed the deductible will be solely your responsibility to replace. (For more on different insurance policies, read 5 Insurance Policies Everyone Should Have.)

Related Articles
  1. Insurance

    Which Kind of Life Insurance Is Best for You?

    Parse the pros and cons of different policy types to ensure the best coverage for your needs.
  2. Home & Auto

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  3. Insurance

    Umbrella Insurance: You May Need It, Too

    If you have assets to protect – or just run a business from home – you could be unpleasantly surprised at how much you need umbrella insurance.
  4. Home & Auto

    Avoiding the 5 Most Common Rent-to-Own Mistakes

    Pitfalls that a prospective tenant-buyer could encounter on the road to purchase – and how not to stumble into them.
  5. Home & Auto

    When Are Rent-to-Own Homes a Good Idea?

    Lease now and pay later can work – for a select few.
  6. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  7. Home & Auto

    Après Ski to Profit: Investing in a Swiss Chalet

    Evolving Swiss property laws mean that Swiss ski chalets have become precious commodities – and excellent investments, even if you're not British royalty.
  8. Home & Auto

    Is Running a Short-Term Rental Worth the Hassle?

    The pros and cons of hosting short-term rentals in your home.
  9. Insurance

    How to Shop for Home Insurance

    Tips for getting the best protection for your place and possessions.
  10. Credit & Loans

    The Hi-Tech Future of Mortgage Applications

    Three sites that are simplifying your path to home ownership.
RELATED TERMS
  1. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the ...
  2. Comprehensive Glass Policy

    An insurance policy that covers glass that has been broken or ...
  3. Directors And Officers Liability ...

    Directors and officers liability insurance covers you if you're ...
  4. Attractive Nuisances

    An item, located on a property, that is appealing but potentially ...
  5. Boat Owners' Insurance

    An insurance policy that provides coverage for individuals who ...
  6. All-In Coverage

    A type of insurance coverage that applies to communally used ...
RELATED FAQS
  1. What are the main factors that impact share prices in the insurance sector?

    The main factors that impact share prices in the insurance sector are interest rates, earnings and actuarial risk. In the ... Read Full Answer >>
  2. Why do insurance policies have deductibles?

    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>
  3. Why should value investors consider the insurance sector?

    Insurance companies receive steady cash flows for years with irregular payouts. Following these payouts, insurance companies ... Read Full Answer >>
  4. How much do changes in interest rates affect the profitability of the insurance sector?

    Interest rate risk for insurance companies is a significant factor in determining profitability. Although rate changes in ... Read Full Answer >>
  5. Under what circumstances would I benefit from a high net worth insurance policy?

    A high-net-worth insurance policy is specifically tailored to suit the needs of high-net-worth individuals. It is specifically ... Read Full Answer >>
  6. How can premium financing of life insurance help high net worth individuals (HNWI)?

    Premium financing of life insurance can help high-net-worth individuals (HNWI) by maximizing use of capital, avoiding lost ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!