You might have a homeowner's or renter's insurance that covers you in the case of damages to your home, but what about damages to your furniture, equipment, and other belongings? Sadly, many people find out too late that these damages aren't covered by their policy. That's where personal property insurance fills the gap. This insurance covers all movable property, such as furniture and equipment, and is included in some homeowner's policies. If you plan to get homeowner's insurance you should make sure to either get a policy that includes personal property insurance, or take out a separate personal property insurance policy. You will usually save money by getting the combined homeowner's and personal property insurance.
When you purchase a personal property insurance policy, you should seriously consider getting a policy that offers replacement cost coverage. Though this coverage costs a bit more than the standard actual cash value coverage, it may well be worth the extra charge. If, for example, your furniture is damaged, replacement cost coverage will pay the cost of replacing your furniture. Actual cash value coverage would only pay out the estimated value of the furniture, which is usually very low.
Most policies set a limit to the total benefit that can be paid out, as well as limits per item. Category limits for a specific type of item can be much lower than the actual value. But, many insurers allow you to set the limit for specific items to match their value. For example, the limit payable for a ballpoint pen may be very low, so you may want to specify a higher limit for your limited edition Mont Blanc. It's also recommended to keep records of your valuables such as receipts, photographs and appraisals as proof of their value.