What is the Difference Between "Real" and "Personal" Property in Insurance?

We all live by definitions on a daily basis in regards to items that exist in the world around us to help us differentiate in discussions. There are customary definitions for things that we all use everyday like cars and restaurants, but there are other definitions that are more understandable to some than others. Insurance definitions are the second kind as they are known to those in the insurance world, but not to those who work in other sectors. One type of term that is confusing to many people is property that is "real" versus "personal".

To help explain the differences we will call on the experts at the AICPCU (American Institute for Chartered Property Casualty Underwriters). According to the experts, "real property" is: "Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land." This could be your home or rental property along with all of the trees, plants and minerals that exist on the property.

This is how many people got rich during the oil booms as people found oil that existed on the property and sold it for profit. People became very rich this way and were able to set up their families for years to come. Real property is generally things that serve a functional purpose in our society and have real value because of it. This is not necessarily true of "personal property".

Again, from our friends at the AICPCU (American Institute for Chartered Property Casualty Underwriters), "personal property" is: "All tangible or intangible property that is not real property." This is the property that usually means something to you and maybe your family, but not necessarily to everyone around you. Think of this as items that have a recreational or sentimental value to you that is astronomical, but nobody else may pay anything at all for.

Family heirlooms like silverware, jewelry, antiques and art work may mean the world to you and your family, but will not amount to much to other people. You could also apply this definition to cars, trailers, boats, and planes. It would also apply to personal items of value like autographs from famous people to collectors cards of sports figures or Hollywood starlets. These items may have changed your life, but they may not have a functional value to society.

The difference between real property and personal property is a big deal in the insurance world as one can have more value than the other. Don't sell yourself short and determine the value of your property before filing a claim.