Your House Burns Down. One Coverage Rebuilds the Walls, The Other Replaces Your Couch.
The Two Promises of a Homeowners Policy.
Imagine your house burns to the ground. Your homeowners policy makes two distinct promises to you. Dwelling Coverage (A) is the promise to rebuild the physical structure—the walls, the roof, the floors. It gives you the money to hire a contractor and reconstruct the house. Personal Property Coverage (C) is the promise to replace all the stuff that was inside the house—your furniture, your clothes, your electronics, your kitchenware. One rebuilds the container; the other replaces the contents.
How Your “Personal Property” Coverage is a Percentage of Your Dwelling Coverage (And Why It Might Not Be Enough).
The Automatic Formula That Can Leave You Short.
A standard homeowners policy automatically calculates your Personal Property (Coverage C) limit as a percentage of your Dwelling (Coverage A) limit, usually between 50% and 70%. So, if your house is insured for $400,000, you will automatically have about $200,000 of coverage for your belongings. For many people, this is enough. But if you have expensive furniture, high-end electronics, or a lot of valuable “stuff,” this default amount might be dangerously inadequate to replace everything you own.
The $2,500 Sub-Limit on Jewelry and Electronics That Your Insurer Won’t Brag About.
My Wife’s $10,000 Engagement Ring Was Only Covered for $2,500.
After a burglary, we were devastated. We were relieved we had insurance, until we read the fine print. My wife’s stolen jewelry collection was worth over $15,000. But our policy, like most, had a special “sub-limit” for jewelry, typically only $1,500 to $2,500. The company would not pay a penny more than that for our entire collection. It was a shocking and costly lesson that certain valuable items are not fully covered by a standard policy.
A Tale of Two Claims: Rebuilding the Structure vs. Replacing Everything You Own.
One is a Single Check. The Other is a Thousand Small Receipts.
Filing a Dwelling claim is relatively straightforward. You get a bid from a contractor, and the insurance company pays to rebuild the structure. Filing a Personal Property claim is a massive, painstaking ordeal. You have to create an inventory of every single thing you owned, from socks to spoons, find receipts or prove their value, and then go out and replace them. It is an emotionally and administratively draining process that highlights the profound difference between these two coverages.
How to Create a Home Inventory to Prove What You Lost (And Get Paid).
The 5-Minute Video That Can Save You a Fortune.
The best way to prepare for a Personal Property claim is to create a home inventory before you have a disaster. The easiest way to do this is to take out your smartphone and walk through your entire house. Open every closet, every drawer, and slowly video record everything you own, narrating as you go (“This is my new 65-inch TV, I bought it last year…”). Upload that video to the cloud. In the chaos after a fire, this simple video will be an invaluable and irrefutable record of your belongings.
Don’t Confuse the Value of Your House With the Value of Your Stuff.
They Are Two Separate Assets. They Need Two Separate Valuations.
It’s easy to think, “My house is insured for $500,000, so I’m fully covered.” But that $500,000 is for the structure. You must do a separate, rough calculation of what it would cost to replace every single thing you own if you had to start from scratch tomorrow. Your clothes, your furniture, your kids’ toys, your kitchen appliances—it adds up incredibly quickly. The value of your “stuff” is often much higher than you think.
Is 50% of Your Dwelling Coverage Enough to Replace Every Single Thing You Own? (Probably Not).
The Default Might Not Be a Good Fit.
If your home is insured for $300,000, your default Personal Property coverage might be $150,000. Is that enough? Imagine walking into an empty, new version of your home. You have to buy every bed, every couch, every fork, every towel, every shirt, and every laptop for your entire family. Could you do it all for $150,000? If the answer is no, you need to call your agent and increase your Coverage C limit.
The Special Rider You Need for Your Expensive Engagement Ring or Camera Gear.
“Scheduling” Your Valuables for Full Protection.
The solution to the low sub-limits on things like jewelry, firearms, or fine art is a “Scheduled Personal Property” rider. For a small additional premium, you can specifically list (or “schedule”) your valuable items on the policy. You will need a recent appraisal. This rider provides separate, “all-risk” coverage for your valuables, with no deductible. If my wife’s scheduled $10,000 engagement ring is lost, stolen, or even just dropped down the drain, the policy will pay the full $10,000.
Coverage A is for the Container. Coverage C is for the Contents.
The Simplest Way to Remember the Difference.
This is the easiest and most accurate way to think about your homeowners policy. Coverage A (Dwelling) insures the physical container that is your house. Coverage C (Personal Property) insures the contents that you put inside that container. When you see your policy through this simple lens, the distinct and separate purpose of each coverage becomes crystal clear.
The Underinsured Mistake That Leaves Fire Victims Unable to Refurnish Their New Home.
They Rebuilt the House, But They Had to Live in it with Lawn Chairs.
My friend’s family had a terrible fire. Their Dwelling coverage was adequate, and after a year, their house was beautifully rebuilt. But they had been underinsured on their Personal Property. The insurance money ran out long before they could replace all their furniture, clothes, and other belongings. They were left in a brand-new house, but it was mostly empty. They had survived the fire, but they were still victims of being underinsured.