Homeowner’s insurance is often something people get as a condition of a new mortgage and then don’t think about it again – until they need it. If you haven’t reviewed and updated your policy for a while, you’re likely to get an unpleasant surprise when you start the claim process.
If you’re into new tech and gadgets, it can be very easy to wind up under-insured for theft, fire damage, and flooding. That’s because a big part of your home insurance coverage protects replacement cost for your contents or personal belongings. Slowly collecting or upgrading big-ticket items without updating your insurance can leave you paying out of pocket to replace them after a loss.
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Check Your Home Insurance
If you keep up with the latest technology, you need to make sure you have enough insurance coverage in case something happens.
You can do this by taking a look at your long-form insurance policy and checking your limits under the Contents Insurance part of your policy. Be sure to look for special limits on gaming devices, computers, tablets, and software. Special limits or maximums often apply to personal contents that can be highly valuable, like electronics and jewelry.
Learn About Specified Perils
Does your policy have special limits on contents that apply based on the specific peril at issue? Many policies apply “special limits” to the loss of personal content in some circumstances, especially in expensive categories like jewelry or electronics.
For example, if your home entertainment system, gaming rig, drones, etc. were stolen, your coverage may be under a “special limit.” This means you might not have enough funds to replace what you lost and you would be on the hook for the difference.
However, if the same items were lost due to a fire (or other “specified peril” named in the policy), the special limit might not apply. Instead, you would receive full compensation according to your coverage (Actual Cash Value or Replacement Value).
In other words, if your entertainment system was subject to a special limit, you might be entitled to more fulsome coverage if it were lost in a fire then the limited amount you’d be entitled to if it were stolen.
Actual Cash Value vs. Replacement Value
This is one of the most important terms in your policy if you own expensive technology. An Actual Cash Value policy will pay out what the belonging was worth when it was lost, which means accounting for depreciation (the loss of value that comes with age caused by wear and tear and reduced desirability). If you’ve ever bought a second-hand laptop, you know how steep the discount can be. Replacement Value coverage, on the other hand, provides a payout sufficient to purchase a new item (the same or a comparable model).
It may be less expensive to buy a computer several years after it came out as better technology becomes available, but generally speaking, Replacement Value coverage is a better bet than Actual Cash Value coverage. Regardless of the monetary amount, Replacement Value coverage makes sure you’re back to where you started before the loss.
Deductibles
If you’re not sure if your home insurance provides enough coverage given the tech you own, look at your deductible for personal content. The deductible is the amount you have to pay to replace personal contents before the insurance company pitches in.
Paying a higher deductible is an easy way to reduce your premiums, but it comes at a cost if there is ever an actual loss. Compare your deductible with what you have in savings. If you couldn’t afford to pay it, you may need to consider raising premiums or setting aside more money in case of an emergency.
Home Security Tech to Keep Your Belongings Safe
Anyone who’s already invested in tech should look into some of today’s state-of-the-art home security systems that can help keep your belongings safe. Investing in new home security can even reduce your premiums without affecting your coverage, as insurance companies will consider your home to be at lower risk for theft. Monitoring and security devices can reduce your homeowner’s insurance by 20 percent and give you more peace of mind.
Home security can be easily integrated into a smart home hub. You don’t have to invest in a whole system right away either; there are plenty of devices that can individually provide enhanced security. Here are some ideas for security devices you can use to reduce the risk of theft in your home:
- Security cameras that connect to your Wi-Fi and can be checked from your mobile or tablet;
- Smart locks that can only be opened using a mobile app and that allow you to create access schedules based on specific hours and days of the week for specific individuals; or
- Software protection like Bitdefender protect your smart home security system from hackers.
Check your insurance, beef up your home security, and make sure you won’t be on the hook for excessive costs if you’re the victim of home theft.
Neha Nidhi
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