Cheap home insurance
The maximum dollar amount of your coverage on personal possessions is based on a percentage of the coverage you have on your house (unless you rent or own a condominium). It’s usually 50 percent. Thus, if your home is insured for $80,000, your personal property would be insured for $40,000.
Most standard homeowners policies cover personal property — such as furniture, clothes, and appliances — for its actual cash value only. Actual cash value is the cost of replacing your possessions minus a depreciation factor.
For example, suppose a thief takes, among many other items, a coat that you paid $100 for four
years ago. To buy that same coat today might cost $175; this amount is the coat’s replacement value. If your personal property is covered for its actual cash value, the insurance company will subtract a depreciation factor before paying your claim. For some personal property, such as clothing, the depreciation factor can be quite large. For a four- year-old coat, the actual cash value might be $30. You would have to pay the other $145 if you wanted to replace the coat.
A better option is to buy replacement cost coverage for your personal property. It costs more than standard coverage, but it reimburses you for the actual cost of replacing property at current prices.
To determine whether your personal property coverage is adequate, you need to assess the value of your possessions and estimate what it would cost to replace them.