Do you have enough insurance coverage to protect your valuables?

Upon arriving home from vacation, you discover that burglars broke in and stole your grandmother’s diamond ring, a piece that was appraised at about $5,000. The loss is certainly an emotional one, as you know you’ll never recover the ring’s sentimental value. But given the amount of personal property coverage you have in your homeowners insurance policy, you figure you’ll at least be able to recoup its monetary value. 

But when you call your insurer to report the loss, you get an unwelcome surprise: Your policy caps payments for the theft of jewelry. Rather than the ring’s $5,000 worth, you’ll get just the maximum amount allowed—often around $1,000. 

Many people find out too late that their insurance has “sublimits” within the overall limit for certain items. That means that even if you have a total of $200,000 or more of personal property coverage, you might only get a fraction of that, depending on the type of loss. For example, sublimits are common for the theft of items such as jewelry, firearms, or silverware. But be careful: Sublimits often also apply for items such as money, collectibles, and personal computers, regardless of the type of loss. 

What’s more, a basic homeowners policy won’t always cover every type of loss. For example, many policies won’t cover the loss of a precious stone if it falls out of a ring and is lost.

However, almost every insurer will allow you to purchase more coverage for valuable items. Most insurers have two options: scheduled coverage and increased policy sublimits. 

What is scheduled coverage?

Insurers often recommend scheduled coverage, also known as a personal articles floater (a.k.a. PAF), for particularly valuable items. You list each asset, along with a description and value, on a “schedule,” which also notes the coverage for each item in the event of a loss. Scheduled coverage is good for something you wear every day, such as a wedding ring, because the potential for loss is greater. 

Pros of scheduled coverage

Some companies offer scheduled coverage with no deductible. Also, in general, more types of loss are covered, including what insurers call a “mysterious disappearance.” 

Cons of scheduled coverage

The process usually requires you to get your valuables independently appraised. Also, premiums are generally higher for scheduled items than those for an increased sublimit.

What are increased policy sublimits?

With increased policy sublimits, you simply pay extra on your homeowners insurance premium or purchase an endorsement to raise the limit for a particular category of valuables.

Increased limits are good for people who own many nice items, but none that have a particularly high value. For instance, if you have a cabinet full of fine china you’d like to protect more thoroughly, but it doesn’t seem worthwhile to insure each piece, you can increase the sublimit total from, say, $1,500 to $5,000. 

Pros of increased policy sublimits

The process is easier than the one for scheduled items, and premiums for raising the limit(s) tend to be less expensive. 

Cons of increased policy sublimits

There is still a limit on how much can be paid out for each item, and pieces are usually covered in fewer situations than with scheduled coverage.

Take inventory of your valuable items and assess whether to purchase more coverage. While a higher payout won’t bring back a family heirloom, it might help cushion the feeling of loss.