There are several limitations in the homeowners insurance policy. While there is coverage for the contents in your home, this coverage is limited for certain valuables such as jewelry, art and computer equipment.
Note. If you have a valuable collection, anything ranging from fine art to baseball cards, your homeowners policy probably won't provide full coverage if the collection is damaged, destroyed or lost. For example, the standard policy will provide a maximum of $1,000 coverage for your jewelry if it is lost or stolen.
Tip. When you buy or renew your homeowners policy, talk to your agent about the coverage limitations for personal property. As a rule, if you have a collection or an individual item worth at least $2,500, you should discuss with your agent additional coverage options, because your homeowners policy may not reimburse you fully if the collection or item is damaged or stolen.
Fortunately, you can obtain adequate coverage for your collections, your computer equipment, your art and your jewelry.
Tip. If you have a significant amount of jewelry, fine art or computer equipment, or any valuable collection, you should consider purchasing a special personal property endorsement, or "floater," that is attached to your homeowners policy and provides the coverage you need.
On these endorsements or floaters, you provide a list of items you have. The higher the value of your items, the more the added-on coverage will cost. Your agent can recommend endorsements or floaters that can provide the coverage you need.
So what is better, Replacement Cost or Actual Cash Value?