The overriding thought about insurance is to put you back as you were before the loss, nothing less or nothing more. While your home (the structure, otherwise thought of as anything you’d leave behind if you moved), is covered as all risk. Let’s leave the specifically excluded perils behind for now. Conversely, your personal property (your contents, the things you take with you when you move), is covered by named perils only. Because insurance is designed to put you back as you were, they’ll often pay you a value equal the current value of your property at the time of the loss, but will pay you UP TO the replacement cost if/when you replace it. This answers the question about paying $5K for speakers valued at $15K. In theory, neither number matters. Insurance will pay you the actual cash value at the time of the loss, and if you have replacement cost, they’ll pay you the reasonable cost to replace the damaged speakers. This doesn’t even touch a discussion about specific limits within your policy and the thought that your music could be considered a collection or collectible.
Home owner's insurance question
Reading through my policy it would appear that through the personal property section an audio system is covered for loss. No special rider is necessary. But the replacement cost section states that the insurance company won't pay until you actually replace your stereo system. If one makes a big claim, let's say $100,000, how does one pay this first if you're going to get paid afterwards? What if you don't have the money to re-buy your system or you choose not to replace it? Can any insurance experts explain to me how these home owner policies actually work?
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mr_m1,009 posts 02-07-2019 3:01pm Is it true most insurances will cover a "Zombie apocalypse?"...:-) Only if you use the right Ammo. https://www.laxammo.com/defense/hornady-zombie-max |
This has been an incredibly valuable discussion. Makes me think, do I truly have the most monetarily valuable asset in my home truly protected. While I may have some level of protection, has that protection been truly verified and documented? Have I done a good enough job of cataloging that equipment and accessories? Have I created a complete recorded trail of the costs of such equipment and accessories? Am I up to date with my insurance rep on how my policy actually works? My equipment and music collection is by far the most valuable asset in my home (outside of those living and breathing beings). I now second guess my level of protection and will definitely start working together tightening this up. Thank you for an important post and getting me to think about this more. |
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Glad to see other insurance professionals here. All very good advice. I’ll just add a few things. 1. LP’s if considered “collectible LP’s (an intrinsic value that appreciates) can be insured separately under a Personal Articles Floater, as can be jewelry, other collectibles, camera, artwork and more. This type of policy is “all-risk” vs named peril; even dropping a LP would be covered. 2. A cash settlement will include depreciation but replacing the item ( if you have replacement cost coverage on your personal property, most people do) you will get you full retail value. 3. AV gear does not normally appreciate in value so it typically cannot be insured for all-risk coverage. 4. The value of an educated insurance agent with a qualified staff cannot be said enough. Dealing with unlicensed people in a call center, well “ you get what you pay for”! That statement also applies to auto insurance. My agency insures people weekly with the wrong type of insurance. Dave |
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