If your personal belongings are stolen, your insurance policy may be able to cover the replacement cost. Finding out that your expensive laptop or smartphone was stolen when you were away is stressful. It’s even worse when you find out you’re not covered and have to pay for replacements out of pocket. There are different insurance policies that can cover you based on the circumstances of the theft. The personal property coverage listed on your insurance can tell you if you’re covered for theft in different locations. If your property is stolen inside a vehicle, you may be covered even with homeowners insurance. This guide will focus on the way insurance companies treat theft outside the home and whether HO-3/HO-5 policies cover theft outside the home.
Does homeowners insurance cover theft outside the home? Yes, homeowners insurance policies such as HO-3 cover theft outside the home, and some cover you internationally when you’re traveling. If your personal belongings were stolen in a vehicle, office, public transport, or any location outside the home you will be covered as long as they’re listed on your inventory. The only difference is that you have lower coverage. Stolen property outside the home is capped at 10% of the total insurance on the home. This means if your home insurance coverage is $500,000, you will be entitled to $50,000 in property insurance outside the home (minus the deductible).
The majority of standard homeowners insurance policies will cover theft outside of the home via protection known as off-premises coverage. If your particular carrier doesn’t offer it as part of your standard plan, you can get it as an endorsement. This will protect you and your family from any type of loss or theft of your personal belongings as well as give you liability protection in case of accidental injuries or damage to property. The moment that you purchase something, e.g. if you are out shopping, it becomes your personal property, you own it, and it is covered. This coverage is not just for homeowners. It extends to those who rent properties along with the condominium owners as well.
This is a great benefit to have with your homeowners insurance policy, but you also have to weigh the limits of the off-premises coverage along with the deductible which will allow you to decide if it’s really cost-effective for you to go through the claim-reporting process or rather leave your claim filing history clean.
Off-Premise Theft
Theft outside the main dwelling is considered off-premise theft. If you’re wondering why homeowners insurance covers personal property outside the home, the answer is because it’s on your property list. When you sign a contract for home insurance, the insurance company asks you to deliver a list of items for insurance. These items are automatically covered when they’re removed from the home. The only difference is that your coverage is more limited if they’re stolen outside the home compared to inside the home. Stolen items outside the home are also covered under an ACV (actual cash value) policy. This means you’ll get paid according to the current market value of your items.
The coverage extends to your immediate family and anyone who resides in the home, as long as their property was listed on your homeowners policy. This includes spouses, children, parents, grandparents, or anyone living in your home that was listed under the policy. To exemplify how far this coverage stretches, if you sent your kid to boarding school and they were insured under this policy, you would be covered for theft that occurs in their dorm room. The only exception for children is when they move away from their school housing (i.e. boarding dorm/campus housing) into their own apartment. The family would also be covered if they bring their personal property when they’re traveling abroad.
Items Stolen At Secondary Structures (Shed, Guest House, etc.)
There are secondary structures on the property such as detached garages, guest houses, sheds, stables, and others. If your items are stolen from these areas, it typically wouldn’t be considered off-premise theft (consult your insurance agent to make sure). Home insurance typically insures you for losses in two categories and those are personal property and dwelling coverage. If the burglar breaks into a secondary structure on the property and causes damage, you will be entitled to a portion of your main dwelling coverage to repair the damage. Example: Damaged doors, windows, and locks will be covered.
The same coverage applies for personal items you stored in secondary structures. This includes work machines, TVs, or anything other property that was on your inventory list. Make sure to check with your insurance agent to make sure theft on your property is fully covered and not restricted like theft off-premise.
Theft Not Covered By Homeowners insurance
There are certain categories of items that are not covered by homeowners insurance even at home. These are high-value items above a certain dollar limit. The limit on claims is usually $1,000 for each item and $2,500 for sub-categories. Example: You might have a $2,500 limit on clothes and this would allow you to claim 25 pairs of jeans worth $100 if they were stolen. Valuable items such as jewelry, artwork, cash savings, designer clothes, weapons, and others, will not be covered by homeowners insurance.
If you want to cover your high-value items, you can schedule them individually. This allows you to insure a particular item such as a diamond ring or a rifle for its full replacement cost. If you schedule an item it will likely raise your premiums. You also have the option to raise the overall coverage on all items in your household which would also lead to increases in premiums.
Insurance companies tend to offer separate policies for such high-value items. For instance, you can purchase “jewelry coverage insurance” that will insure your jewelry possessions at home. This is completely independent of your home insurance policy. You can find similar coverage for weapons, coin collections, music instruments, and other valuable possessions. The main advantage of these individual policies is that they provide coverage for more perils. For instance, a lost ring might not be covered by homeowners insurance while it will definitely be covered by jeweler coverage insurance.
Car Theft Vs. Car Break-Ins
Most items outside the home are stolen in a person’s vehicle. Burglars tend to target parking lots where they can get in a vehicle and steal its contents. Insurance companies treat car theft differently. For instance, while the car is your personal property it will not be covered by homeowners insurance. It also won’t be covered by collision insurance.
You need comprehensive insurance to replace a stolen car. Homeowners insurance will only cover you if your property was stolen from the interior of the car. This means if you left a laptop or a phone inside the car and it was stolen, you’ll be covered up to a certain policy limit.
Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)
There are two ways insurance companies reimburse you for theft: ACV (Actual Cash Value) and RCV (Replacement Cost Value). Actual cash value is the current market value of the item while replacement cost value is the cost you initially paid for the item. If you bought a depreciating item like a TV for $1,000 and it’s worth $400, the insurance company would pay you $400 under an ACV policy.
If you have a replacement cost value you will get the original value you paid for the item. The reverse also holds true for items that appreciate. If you purchased a gold necklace for $1,000 and today it’s worth $1,500, you would get $1,500 under an ACV policy and $1,000 under an RCV policy. Structure your policy in a way that you can get the most value when you have to file a claim.
Off-Premises Coverage At Work
There are many instances where off-premises coverage is going to benefit you and your family in cases of loss, damages, or liability. A couple of these examples include:
Personal liability
If you find yourself on a trip where you are out on the beach playing volleyball and you happen to spike the ball knocking another player unconscious or maybe send it flying through someone’s glass window, would you be considered as liable? Most likely, you would. In this instance, the homeowners insurance policy would take care of reimbursing for the broken window or the medical bills for the unconscious person along with any type of legal fees that come along for claims or lawsuits, which would probably include awards up to limits of the liability coverage, and you would not have a deductible for this. A really crucial thing to remember is to always carry your insurer’s contact phone numbers with you wherever you go so that you’re prepared for any type of event.
Dorm Room
When your child goes off to college and they find that their personal possessions have been stolen, this is something that will also be covered even though they are residing in a different place. Generally, a homeowners insurance policy is going to cover your content inside your dwelling for between 50-70% of the value that your home is insured for. Carriers will then limit the amount of coverage on personal belongings to approximately 10% when it happens away from home. So, you won’t receive as much reimbursement for off-premises coverage (unless you opt for more), but you will be covered.
You want to check with your carrier to make sure that your policy has off-premises coverage as standard and, if not, it would be a good idea to add it on to your policy as an endorsement. The liability coverage alone is worth it.
