1/13/2015 11:20 AM

Choosing a Value for Personal Property

“I don’t have much, and it’s not worth anything.”

I find it absolutely amazing how many people value their own belongings at so little money!  I’m not sure if we all think about the price an item was when we bought it, but it seems people rarely value their own belongings high enough.  If you’re looking at minimal coverage for your personal property, like the lowest levels of $15 or $20,000 allowed for renters insurance, you might want to think again.

ClosetTake for example, your closet.  When you think of replacing everything you own, this is probably the last area you think of.  I know if I were to think of losing everything in my house, my clothes would be the items I would think about the least.  Until, of course, I had to find something to wear every day.  You kind of can’t go to work every day without at least a small closet of clothes and some shoes. 

I had a terrible, close and personal experience with replacement of clothes.  When I was in a car accident years back, the other vehicle hit the door I was sitting next to and the window crashed all over me.  Glass everywhere.

Well beyond this being terrifying, the aftermath was no fun either.  It was the middle of winter, and I was wearing a fairly new pair of pants from the oh so expensive New York and Company (decided to spoil myself at a close to Christmas sale) and a wonderful, old winter coat.  I’d had this coat for many years, but hadn’t worn it for a couple of years so it was still like new.

Both of those items were destroyed by the glass.  Nothing would have cleaned it all out.  The other party was at fault, so I had to deal with their insurance company.  They valued my clothes based on actual cash value (ACV).

If you don’t know, ACV is no fun when it comes to personal property.  That’s why when we sell a homeowners policy, we give you the option for replacement cost. Don’t give up that option – it is worth the extra money if you have a loss.

Anyway, with actual cash value, my new pair of pants was worth more than my coat.  And the only reason I got the whole amount back for the pants was because I still had the receipt.  The money I got for both items was only enough to buy myself a new coat.  No fun pants anymore.

So my main point is everything costs MUCH more to replace than you think.  My old coat was worth about $20.  A new coat of the same sort cost about $250. Now imagine a closet with a few coats, some shoes, shirts, pants, and more.  If you had to buy every item in that closet all at once, brand new, no sales, could you even imagine how expensive that would be?

Now add a bed, washer, dryer, fridge, T.V., computers – The costs add up really fast!  If you have a rental policy and are picking your own coverage, go room to room first before you say everything you own isn’t worth much.  Homeowners policies usually give a percentage of the dwelling coverage for contents – just make sure it is enough to cover your belongings.  Whatever coverage amount you choose, it should be enough to cover everything you own.  If it’s over, well that’s a lot better than not having enough.


Photo: “Closet reorganization” by Liz. 28 July 2009. Original. Flikr. CC BY 2.0.

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