What is Contents Insurance Coverage?
Contents coverage, also known as personal property coverage, is insurance for damage or loss to property within a home, apartment, condominium, office, or any building. If property is damaged due to fire, theft, or other causes, the policyholder is entitled to be paid for the amount of the damage to the property – provided the cause is covered by the terms of the policy. Although the coverage is usually of a “blanket” nature with a set limit, many policies also limit coverage for certain types of items, such as artwork, guns, etc. For valuable items like those, it is also often wise to schedule them, meaning that a separate rider is issued to cover those items and then the broader “blanket” policy is left with full limits to cover the remainder.
Contents coverage, depending on how the policy is worded, can also cover damage to items that are damaged when they are taken away from home or are located in outside structures such as gardens and sheds.
Common contents policy concerns
Some of the insurance issues that can be litigated on content policies are:
- The value of the damage. Damage can be valued either by the actual cash value of the item or the replacement value. Actual cash value is calculated by subtracting depreciation (due to age, condition, etc.) from an item’s replacement cost value. Replacement cost value policies typically only truly pay “replacement cost” when damaged items are actually replaced. In fact, until the items are replaced, most insurers are only obligated to pay “actual cash value.” However, some higher end policies offer guaranteed replacement cost coverage with no depreciation at all, even if the damaged items aren’t replaced. This coverage is hard to find and usually expensive, but is certainly something to be considered when shopping insurance.
- The amount of coverage. Coverage can be limited in several ways. The policy may cap the total amount the insurance company will pay for damage to contents. Typically, the amount of the coverage for homeowners is set at a percentage of the coverage on the structure, i.e., 50% or 75% of the structure coverage. However, this can be changed by request, so it is important to have a good handle on the value of your belongings. For a business, it is critical that your business personal property, equipment, and inventory are all appropriately insured. Further, if you are a tenant in a commercial property, your “tenant improvements” will be considered “business personal property” under most policies so you need to account for that as well when selecting your coverage limits.
- Perils covered. The policyholder should review with his/her agent what perils are covered:
- Damage by fire, theft, accident, windstorms, flood, water, etc. are all common and it is critical that these perils be covered. Some policies are named-risk (meaning all perils are excluded except those that are specifically listed) and some cover all risks (meaning all perils are covered except those that are specifically excluded). All risk policies, also called broad form policies, are clearly superior and should be requested.
- Consequential damages, such as damage to inventory due to humidity, cold, or heat, should be specifically identified
- Separate insurance may be needed to cover damage of personal and business possessions due to flooding.
At McWherter Scott & Bobbitt, our Tennessee insurance dispute attorneys hold insurance companies accountable to pay all the damages that are covered by your insurance policy. To learn if you have a claim, and to speak to an experienced insurance dispute attorney like Brandon McWherter, Clint Scott or Jonathan Bobbitt, please call us 731-664-1340, or fill out our contact form. We have offices are based in Nashville, Chattanooga, Memphis, Jackson, and Knoxville, Tennessee.
Brandon McWherter has dedicated his practice to assisting insurance policyholders with their claims against insurance companies, including claims for bad faith. He is licensed in Tennessee, Arkansas, and Mississippi. Learn More