Contents insurance is part of your homeowners policy. To help homeowners understand what that means, insurance agents often tell them to imagine picking up their home and turning it upside down. Anything that falls out is usually covered by contents insurance.

When people shop for homeowners insurance, they often focus on the dwelling coverage portion of their policies – probably because the replacement cost of their home’s physical structure represents the most significant potential for loss. However, whether or not you could replace the belongings in your home in the event of a total loss is just as important a consideration. 

Think about all the things you own that make a house your home. The value of your furniture, appliances, rugs, and other home goods can quickly add up, and that’s before we consider items like jewelry, artwork, and clothing. 

The sheer number of things you have may make it seem impossible to truly quantify, but having the right amount of home contents insurance can make all the difference in how completely you recover from a disaster.

What does contents insurance cover? 

Contents insurance (also called Coverage C or personal property coverage) typically covers your belongings for damage caused by perils specifically named in your homeowners insurance. For most policies, named perils include: 

• Fire.

• Smoke.

• Lightning.

• Hail.

• Windstorms.

• Theft.

• Vandalism.

• Riots.

• Volcanic eruptions.

• Explosions.

• Falling objects.

• Power surges.

• Damage from a vehicle or aircraft.

• Damage from snow, ice, or sleet.

You may want to ask your insurance agent if your insurer offers contents insurance on an open perils basis. This additional coverage usually comes as an endorsement. It costs more, but it means you’re covered for any type of loss except those that are specifically excluded. 

Another important fact to note is that insurers often insure the contents of your house for their actual cash value. Actual cash value policies pay to replace your possessions for their depreciated value, not their replacement value.

But this is another situation where you may have the option to upgrade by buying replacement cost coverage. With replacement cost coverage, you’re reimbursed for the actual cost of replacing your items, minus your deductible and up to your policy limits, but with no deduction for depreciation. 

What does contents insurance not cover? 

Losses from earthquakes, storm surges, floods, war, and several other perils are typically excluded from contents insurance coverage. (Side note: You can get flood insurance that covers personal property.) Content insurance also doesn’t cover damage caused by normal wear and tear or neglect.

What's more, certain possessions are usually excluded, including:

• Vehicles.

• Credit cards.

• Animals.

• Aircraft and parts.

• Business data.

• Personal property you rent to others. 

How much contents insurance do I need? 

Personal property is usually covered for between 50% and 75% of your dwelling insurance amount. For example, let’s say your dwelling is insured for $300,000 and you want 50% of that for your contents insurance, then your contents coverage amount is $150,000. 

How do you know if that is sufficient? The first step is to take a home inventory. This can help you make sure you purchase enough contents insurance, verify your losses for tax purposes, and help you get your claim settled faster.

Luckily, a home inventory does not take a lot of work. Here’s what you need to do:

• Go through every room in your house.  Don’t forget the garage, the attic and basement as well as any outbuilding you might have.

• Record each personal item. Write down the price you paid, the approximate date of purchase, any model or serial numbers, and an estimate of the value. It’s also a good idea to take pictures or videos of every room and every item from different angles. 

• Gather receipts. Try to find receipts or service contracts for your belongings and attach them to your inventory.

When you are done you need to secure your inventory in a safe place. (Imagine taking the time to prepare your inventory, and then losing it along with your other belongings!) And remember to continuously update your inventory as you add items to your home or make significant purchases.

Contents insurance limits and sublimits

While your contents insurance has an aggregate limit (e.g., $150,000), insurance companies typically group certain kinds of items into categories and assign sublimits to those items. A sublimit is simply a lower coverage amount for a particular risk. 

For example, your contents coverage might have sublimits for jewelry of $1,000 per piece of jewelry and $2,500 for all of the jewelry in the household. If you have a particularly valuable piece of jewelry, or several pieces that are worth more than $2,500, then your contents coverage is inadequate.

Jewelry is one example of a common sublimit, but other items that often have sublimits include firearms, artwork, and computer equipment.

How much does contents insurance cost? 

Contents insurance is part of your policy, but insurance companies typically use a separate premium calculation to determine your costs. The result? How much content coverage you need, whether that coverage is actual cash value or replacement cost, and whether you need higher sublimits or additional coverage all impact your overall premium.

What contents insurance add-ons are available? 

You might find that your contents insurance does not adequately cover certain items, particularly valuables like jewelry, fine art, and electronics. In these cases, you may want to ask your insurance agent about add-ons to increase your coverage. 

There are two ways to increase the coverage limits on high value items. First, you can increase the “special limits of liability” (i.e., sublimits) for the particular categories in which you have more valuable items. Most insurance companies will increase the limit on any category of covered items in $1,000 increments, but they’re also likely to have a maximum amount they’re willing to insure your property for.

The other option is a scheduled personal property endorsement that increases the coverage limit on certain items. Getting this endorsement usually means that your high-value items are listed on your policy with a corresponding individual coverage limit. Moreover, they’re often protected on an open perils basis, meaning they’re covered for any risk that’s not excluded by the policy language. 

Finally, scheduled personal property is typically not subject to the deductible, and the items are covered on a replacement cost basis. This ensures that the item will be fully reimbursed for its appraised value if it's stolen or damaged.

Do I need contents insurance? 

Contents insurance is usually a standard component of any home insurance policy. And that's for a reason: You need it! 

Remember, it covers everything in your home from your clothes and dishes to family heirlooms, computers, furniture, and even your expensive wedding ring – subject to any sublimit or additional optional coverage.

If you're buying home insurance, you're already buying contents insurance. Most home insurance providers require you to carry a minimum amount of personal property coverage, usually around 10% of your dwelling coverage. However, the average homeowner needs more contents coverage than the minimum.  

Contents insurance FAQs

Does contents insurance depend on where things are stored? 

Contents insurance typically extends to items that are stored away from your home, including property in a storage unit, inside your car, and a hotel room. It can even cover a college student's belongings while they're living in a dorm or other student housing. 

Items stored away from the home are often subject to a lower coverage amount – sometimes as low as 10% of your total personal property coverage. If you've got a college student living away from home or you're storing items in a storage unit, be sure to check your policy to make sure you understand how much these items are covered for.

Does contents insurance cover family or roommates? 

Contents insurance covers the belongings of family members who live with you, but it doesn’t apply to roommates or anyone else who is not related to you but lives in your home.  

If you have other people living in your home, be sure to check your policy to understand whose belongings are covered and whose are not. 

Does my contents policy cover items away from home? 

Contents insurance typcally extends to all of your personal belongings wherever you keep them, including while you're traveling. They're still subject to the list of covered perils and all of the coverage limitations within your policy. Make sure to check your policy to understand how it covers your items while you're away from home.