“L [didn’t] I need an actuary to look at a $2,500 Comme des Garçons dress and say, “This is only worth $50,” Clarke says. She was looking for a policy that wouldn’t take into account the depreciation of her dresses – after all, this was no ordinary wardrobe.
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Actual Cash Value vs. Replacement Cost
After speaking with an insurance broker, Clarke was presented with several insurance policies whose content coverage offered the actual cash value. This meant that any claim payments would be based on the market value of the dresses at the time they were damaged or lost, including depreciation. Instead, Clarke wanted her collection to be insured for the amount needed to restore the garments to their original condition or buy them new – she needed a replacement cost policy.
Clarke approached her original insurance company, who told her she already had a replacement cost plan. Her basic insurance policy included $175,000 in content coverage, and none of her dresses exceeded the per-item coverage limit. This gave her peace of mind knowing that her collection was adequately insured.
However, in order to be mated, Clarke had to make a detailed record of all her belongings, which in itself was a very big task. “One of the biggest challenges was just documenting everything,” she says. “I wish I had started that process sooner so it wasn’t such a huge job.”
What is and is not covered under home contents insurance?
When you buy a house or rent an apartment, you can take out an insurance package that covers your household effects. However, many insurers set coverage limits for certain specialty items, such as jewelry, artwork, instruments, and other collectibles. These special limits usually don’t apply to clothing, even the type of clothing Clarke was required to insure.
Coverage limits vary between insurance companies and policies — some can cover up to $5,000 for certain items, others $10,000, while limits for high net worth customers can reach as high as $100,000, according to insurance experts interviewed for this story. These are all subject to the deductible specified in the policies.
If the value of a special item exceeds the coverage limit of a basic policy, you can purchase additional coverage for an additional premium. This will be scheduling an item or listing an item. “It’s like an insurance policy within your insurance policy for that one item,” said Anne Marie Thomas, director of consumer and industry relations for the Insurance Bureau of Canada.
Insuring items above the limits of a policy?
If you want to insure an item worth more than your base policy limit, such as an engagement ring or a Birkin handbag worth hundreds of thousands of dollars, talk to your insurance professional about scheduling or listing that item separately.
This post What happens if you need additional home insurance?
was original published at “https://www.moneysense.ca/spend/insurance/home-insurance/need-additional-contents-insurance/”