Homeowner's Insurance Policy; What Are Special Limits of Liability

For every homeowner, protecting the most important asset, your home, is crucial. As a general rule, homeowner's insurance policies provide the necessary dwelling protection up to the value of the property or, in lender forced coverage, to the limit established by financial principal balances. In addition to dwelling coverage, the homeowner's policy will provide coverage for personal property, also known as Contents Coverage. It is under this Coverage C, Personal Property, where many special policy provisions and limits apply. Understanding the basic special limits of the insurance policy will ensure your personal property is adequately insured in the event a peril takes place.

Personal contents coverage, within a homeowner's policy, provides for coverage of all personal property as set forth in the policy documents and up to a separate policy limit. In most homeowner's policies, personal content items are insured up to the actual cash value which is defined as the cost to replace the item, less non-recoverable depreciation. Beyond a general blanket of personal property coverage, the policy will define items which are subject to special homeowner's policy limits. Such items may include jewelry, cash, antiques, collectibles, items used for business, electronic data and items damaged while in or upon a motorized vehicle. For these items, the special limit of liability will be set forth in the policy languages. For example, jewelry, including gold, silver, platinum, precious and semi-precious stones may be subject to an aggregate special limit of $1500.00. This is to say, if the total loss of all jewelry exceeds $1500.00, the homeowner's insurance company will agree to pay no more than the $1500.00 as per the policy language.

For most homeowners, the special limits of liability may be overlooked and, unfortunately, the homeowner becomes aware of the limit at the time a claim for damages is filed. To ensure proper protection of your personal property, read through the language found under Coverage C, Personal Property, provisions of the homeowner's policy. In the event there is a personal property item which is either not covered, or subject to a special limit of liability, speak with the insurance agent regarding the option to add the item as either a scheduled covered property or the possibility of an endorsement which will provide the coverages with higher or unlimited coverages. The disadvantage to the addition of personal property schedules and endorsements involves the impact the additional coverage will have against the premium, escrow and, ultimately, the final mortgage payment.

For everyone homeowner, the loss of personal property, in a covered peril, is traumatic. When purchasing a home and forced to shop for homeowner's insurance coverage, review all policy provision documents including the language found under Coverage C Special Limits of Liability.