Homeowners Insurance May Not Fully Pay for These Important Belongings

Homeowners can end up with big losses if they don't know their policy's limits.

Property owners usually get protection for personal possessions from their homeowners insurance coverage. Home insurance policies don't just cover the house itself -- most offer both dwelling coverage and personal property protection as standard.

It's important for homeowners with personal property protection to realize that this type of insurance may not offer full coverage for some of their most valuable possessions. Here's why.

Homeowners insurance policies often set special coverage limits for certain assets

While a typical homeowners insurance policy might offer tens of thousands of dollars worth of property damage protection (depending on how much coverage the policyholder purchased), most policies set separate limits for certain kinds of items.

For example, it is very common for home insurance companies to implement very low coverage limits for:

• Jewelry
• Art
• Antiques
• Precious metals (gold and silver)
• Firearms

Many homeowners policies cover these items only up to $2,500, for example, or exclude coverage for them entirely.

A property owner with $25,000 or even $50,000 or more in personal property insurance may assume they're covered in case of fire, theft, or other disaster -- only to find out they receive very limited compensation for some of their most valuable items.

Not everyone has such items in their home, much less more than $2,500 worth. But it's not all that uncommon, especially since an engagement ring plus one or two other pieces of jewelry can add up to a significant amount, as can even a single piece of antique furniture.

For property owners with more of these items than their insurance covers, it can pay to buy an add-on policy. Many insurers sell separate jewelry or engagement ring policies, or policies for antiques and collectibles. Homeowners can research options, find an insurance company offering affordable coverage, and get the protection they need.

Homeowners can usually buy these separate policies from the insurer offering their standard home insurance. They can also consider other carriers -- including some that specialize in jewelry or collectible policies. The key is that this insurance needs to be in place before disaster strikes -- and if you don't know how your standard insurer limits coverage, you may not be aware you need a separate policy.

Every property owner needs to make sure valuable items are fully insured against loss to avoid a financial disaster. Read policy limits and exclusions carefully -- it's best to find out about limitations before things go wrong, while there's still time to put protections in place.