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What is Personal Possession Insurance?

By Tara Barnett
Updated May 16, 2024
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Personal possession insurance is a type of insurance that covers items like home electronics, furniture, and clothing. Anything that is not a motor vehicle or property might be covered by personal possession insurance, but it usually must be covered explicitly in the insurance agreement. Most of the time, personal possession insurance is part of a larger insurance plan that covers a person's property, but it is possible to insure possessions independently as well. Very expensive items, such as fine jewelry, must sometimes be insured independently because their value exceeds the amount permitted by the plan.

Most of the time, personal possession insurance is something to be discussed with an insurance agent when purchasing a renter's insurance or home insurance plan. When discussing what would happen if possessions were somehow stolen, lost, or destroyed, it is a good idea to find out how the value of the possessions would be evaluated. Some insurance plans cover only the actual cost of the item, which gets lower over time, while others cover the cost to replace the item, which is the price of the item in a store. Not all personal possession insurance plans are equal, and most people believe that it is best to cover the cost of replacing the items so long as the cost of insurance would not be a debilitating burden.

Sometimes possessions that are contained in a car, such as CDs or a stereo, are covered in car insurance policies. Often, there is a limit on the amount of money that can be claimed when items are stolen from a car. It is important to understand what is and is not covered in every policy in order to maximize the amount that can be claimed should possessions ever go missing.

Certain personal possessions, such as expensive jewelry or furniture, can be insured with personal possession insurance individually or with a special plan. Often, a policy that insures items of high value that cannot be easily replaced will come with certain constraints. For instance, jewelry may need to be kept in a safe, and the home may need a strong security system. If an item is valuable and must be kept in a home, this type of insurance can help prevent serious disasters.

Most people with personal possession insurance are concerned with being able to replace possessions that are lost during a disaster or to theft. For these people, insurance with very low limits or insurance that replaces only the value the item would sell for is usually not sufficient, although this type of insurance can lessen the financial hardship associated with these tragedies. Ideally, this type of insurance should allow a person to start over in the face of disaster. Depending on a person's finances and the value of his or her possessions, it is often a good idea to buy the best personal possession insurance that can be afforded.

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