What happens if your electronics get damaged or destroyed? Will your insurance cover the cos to repair or replace them? Or will you be left in the lurch having to repurchase new electronics? Here we take a look at whether your home or renters insurance will cover your electronics.
Does home insurance cover my electronics?
A typical homeowners or renters insurance policy will include “contents coverage,” or coverage that will help to replace your personal property should your belongings be damaged by a covered cause. This part of your policy will cover the cost to replace your personal belongings, like your electronics, in the event they are damaged or lost due to a “covered peril.”
But there are some things you’ll want to understand about how your homeowners personal property policy works to ensure your electronics are fully covered.
1. Electronics are only applicable to homeowners covered perils.
Your standard homeowners or renters insurance is either a named peril or open policy. A named peril specifically states the types of scenarios that your insurance will cover, like fire or disaster. An open policy includes all perils except for listed exclusions.
When it comes to insuring your electronics, you are only covered for the perils that your homeowners policy explicitly states. For example, your homeowners policy may exclude flood. If your electronics are damaged in a flood, they won’t be covered under your homeowners’ policy.
This also means that your insurance won’t pay if your electronic device is damaged in an accident, like if you drop it and the phone shatters, or if it’s malfunctioning. It also won’t cover water damage unless that water damage is directly caused by a covered peril, like a burst pipe in the home. Otherwise, these kinds of incidents would usually fall under the electronics warranty, if you have one. You may have the option to purchase an extended warranty to protect against defects and accidents.
Some insurance companies sell “gadget insurance,” which will cover any repairs or replacements no matter what happens to your electronics, but this is separate from your homeowners insurance.
Note: A common cause of electronics damage is a power surge. Most insurance policies won’t cover a power surge unless it was caused by lightning or a storm.
2. There are coverage limits.
Your insurance has standard coverage for electronics, but there is usually a $1,500 limit. This is especially true for portable electronics like smartphones, laptops, and tablets. But $1,500 is barely enough to cover an iPhone, let alone all of the electronics in your home!
Conducting a home inventory can help you understand how much coverage you need for your personal property and your electronics in particular. Get help itemizing your belongings with these home inventory apps. An inventory can keep track of the cost of your valuables, so you can prove the value of the items lost in the case of a claim.
If you find you have a lot of electronics, putting you over the limit cap on your policy, be sure to talk with your insurance agent to figure out the best way to make up the difference. You’ll likely have to purchase supplemental insurance, especially if you have high-value items, but it can definitely be worth it. If your entire house were to get destroyed, replacing your electronics would likely cost you quite a bit.
3. Expensive electronics may need to be scheduled on your policy to be covered.
Your personal property protection offers a basic amount of insurance for all of the belongings in your home. The coverage limits for your personal property are generally tied to the other limits on your policy, generally about 20-50% of the coverage limits on your home itself. The best way to ensure you have enough coverage for your belongings is to take a home inventory, but keep in mind that standard contents coverage is not designed for valuable or rare items.
For high-value electronics, you’ll want to talk with your insurance agent about how best to cover these items. Talk with your agent to understand what your policy will and will not cover when it comes to your electronics. Certain items may exceed your policy’s limits and caps and require additional insurance.
Any time a new high-ticket item comes into your home, you’ll want to work with your insurance agent to understand if it will be covered by your existing homeowners or renters coverage, or whether it requires a rider or supplemental insurance policy in order to be covered.
Check out our guide to insuring valuables with homeowners insurance here.
4. Most policies provide actual cash value.
Standard homeowners policies provide actual cash value (ACV) for lost or damaged electronics as opposed to replacement cash value (RCV). Actual cash value means you’ll be paid out what that electronic is worth today, including depreciation since the time you’ve purchased it.
For example, let’s say you bought a $3,000 TV in 2011. In 2019, that same TV is worth $1,800 due to depreciation, wear and tear, and current market value. If that TV gets damaged in a covered peril, the insurance company will pay you the actual cash value of that TV today: aka the $1,800.
Often, the actual cash value the insurance company pays out isn’t enough to actually replace the item with a new electronic. You’ll have to get a less expensive television or chip in your own money to get the TV that you want.
Replacement cash value offers payment aligned with how much it would cost to replace that lost item with a comparable piece. This may not be the full $3,000 that you originally paid for the TV, but it may be $2,400 to help you repurchase that TV or a similar model.
Replacement cash value typically costs more per month than actual cash value since you would get paid out more in the case of a claim. So, it may not make sense to pay a higher premium for a RCV policy if it wouldn’t offset the cost of your electronics long-term.
The Bottom Line
Is your homeowners’ insurance up to date with all of the electronics in your home? Do you have the right amount of coverage to protect your electronics in the case of a covered peril? Are you prepared for the unexpected? These are questions to review with your insurance agent to make sure you have the coverage for your electronics that you think you do.
While most homeowners and renters insurance policies offer financial protection for your electronics, there may be cases where you’ll want to consider supplemental insurance, whether that’s for high-value items or a policy that is specific to your electronics that covers more perils than just those named in a homeowners policy. Consult your agent and refresh your home inventory regularly to ensure you have the right coverage in place for your electronics and personal property.
Review your home insurance policy to see what kind of coverage it offers for your electronics with help from one of our expert insurance advisors today.
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