How do I replace my personal property?

Complete a home inventory

How much personal property do you actually have in your home? When you see a traditional insurance agent to purchase condo owner or renter insurance, one of the first questions they’ll ask is “How much do you need to insure?” You can take a wild guess, but in the event of a claim, you’ll be much better protected if you have taken the time to complete a home inventory, and based your limit of coverage on this inventory.

Completing a home inventory accomplishes a few things for you:

  • You will establish the amount of contents coverage that you actually need, helping you to avoid accidentally purchasing (and paying for) too much coverage – while also ensuring you don’t accidentally underinsure yourself.
  • You will create a record of all of your belongings. This will come in very handy if you ever suffer a loss; and need to provide your adjuster with a list of things that were lost or destroyed. Instead of trying to imagine your home as it was, you’ll have a ready-made inventory list ready to go.

If you own a house, insurance agents traditionally will estimate the replacement cost of your home, and then set your coverage for contents at a fixed percentage of the dwelling amount. For instance, if you have a $500,000 home, you may automatically get 70% or 350,000 for contents, whether you need that amount or not. Once again, without completing an inventory, you won’t know if this amount is too much or too little for your needs.

At Square One, whether you’re a tenant, a condo unit owner, or a house owner, we let you decide how much personal property you want to insure. If you have $100,000 of belongings in a $500,000 house, no problem; that’s all you need to purchase. You can complete an inventory to verify the amount of coverage you choose, and if you wish, we can even keep it on your file.

To find out how much coverage you need, try our simple home inventory worksheet. It’s available as an Excel file that you can complete on your computer, or as a PDF file that you can print and complete the old fashioned way. We’ve divided our home inventory worksheet into categories, such as appliances, furniture, household accessories, electronics, and clothing. All you need to do is estimate the replacement cost of the items in each category, and you’ll have a good idea of how much insurance you need.

You may also want to consider taking pictures, or a video, of every room of your house. Keep this with your home inventory worksheet somewhere away from your home. After all, if the worst happens, you want this list kept safe so you can refer to it when trying to figure out what’s lost or destroyed. Or you can complete the form, attach any photos, and store it electronically.

Replacing personal property (or not)

You’ve done all your due diligence. On the advice of your home insurance agent, you’ve completed a home inventory and determined how much it would cost to replace all of your belongings. You’ve made sure you have the right amount of insurance. But now, after you’ve suffered a loss, you realize there are some things you just don’t want to replace.

While most people do choose to replace the personal property affected by a loss, some circumstances do arise where you might choose not to:

  • Maybe you’re a retired business person, who no longer needs to wear a suit every day. Will you need to replace all those suits you had hanging in your closet?
  • Perhaps you’ve been hanging on to an old wedding dress for sentimental reasons. If it’s destroyed, will you really want another one?
  • If you’ve got older kids, do you think you’d want to replace all the toys and video games they’ve outgrown?
  • If your entire jewellery box were stolen, there were probably some pieces you were tired of and no longer wore.

Fortunately, insurance doesn’t necessarily force you to replace every single item affected by a claim. Even though most home insurance policies insure your property on a “replacement cost” basis, you usually have the option of settling for cash; every policy approaches this differently, so check your policy wording for the section speaking to the “basis of loss settlement.” Within that section, you should find an option for replacing/repairing the property, or taking the “actual cash value.”

If you choose to use the “actual cash value” option, payment is generally made for the replacement cost of the item at hand, less depreciation. While this is usually less than the full cost of replacement, it usually pays the item’s current value; this resulting cash settlement might be much better for you than replacing an item you no longer need or want.

With Square One home insurance, we go one step further to make this option useful to our customers. If an insured item can’t be replaced, or if you choose not to replace it, we can provide you with a “limited depreciation” settlement. “Limited depreciation” means that we do not depreciate any item any less than 50% of its replacement cost; in many cases, this provides a greater payout than policies that would fully depreciate items that aren’t repaired or replaced.

Customers who do choose to replace personal property often ask us how that process would work, and how much their policy will actually pay to replace an item. Home insurance policies from Square One provide “replacement cost” coverage, which means that our policy will pay the current cost for new items of similar kind and quality. For example: if a fire were to damage an item of your furniture, your adjuster would help guide you in identifying a similar new item, of similar size, shape, colour and quality.

Square One’s fully customized home insurance policies allow individual customers to prepare for these situations in advance. No two people have the same taste in furnishing or personal effects, so we allow you to choose your own limits of coverage based upon your understanding of how much you would need to spend in order to replace your belongings with new items.

For more information on loss settlement, or to get a quote on your home insurance, contact Square One at 1.855.331.6933.

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