If you look at your home insurance policy you will see a page that lists all of the different risks covered under the policy. The declarations page will show the maximum amount your policy will pay for specific types of claims. In a standard home policy, your premium covers, among other things, liability claims, claims for damage to your dwelling, and claims for loss or damage to the contents inside of your home.
No insurance company is ever going to pay out more on a claim than your policy limits. If you suffer a loss that exceeds those limits, you are on the hook for any costs above those limits. While you should make sure your dwelling is fully insured, you should not ignore the importance of having the proper amount of content’s coverage.
While it is fairly easy to determine the amount you need to protect your dwelling, the amount you need to cover your possessions is not so readily apparent. Most people do not keep receipts for all of the things they purchase. Do you know how much your wardrobe would cost to replace? Undervalued contents of home furnishings and personal possessions can become a problem when you need to file a claim.
Most home policies assign a value of your contents equal to about half the value of your dwelling. If your house is insured for $100,000, your contents coverage may have a limit of $50,000. The insurance company does not require you to itemize every item in your house, but they may ask you to provide a list of certain high-priced items. If you have antiques or expensive jewelry, the standard coverage may not provide adequate insurance protection. You can buy additional insurance for your high-value items.
The bottom line is that you should carefully evaluate the value of all of your possessions inside the walls of your home. If you believe that they are worth substantially more than the upper limit of your contents coverage, you can buy more insurance so you are better protected against loss.