Your Home Insurance Often Goes With You
When you leave home, your homeowners insurance typically follows you, protecting you and your family from loss or theft of personal possessions and from liability for accidental injuries or property damage.
"The standard homeowners policy is going to include 'off-premises' coverage, which means that your belongings are covered anywhere in the world unless you have decided against off-premises coverage," says Michael Barry, spokesman for the Insurance Information Institute, an industry trade group.
"The second you buy something, it's yours, and your possessions are covered," says Nick McCummings, manager of Harrington Insurance Agency in Brockton, Mass.
What's more, you don't have to own your home to protect your belongings, wherever they happen to be.
"A lot of people don't realize that renters insurance can cover possessions off-premises," says Allstate spokesman Justin Herndon. "If your golf clubs are stolen from the trunk of your car, that's covered under your renters insurance."
While such coverage may be comforting, knowing your off-premises limits and deductibles will help you determine whether it's cost-effective to file a claim -- or leave your claims history unsullied.
Here are five scenarios in which your homeowners or renters insurance can save you from loss away from home.
A hotel theft can ruin a wedding, anniversary or other special event, especially when high-priced furs, jewels or heirloom pieces are stolen.
If you have a homeowners policy, those items are probably covered. But they may not be covered enough.
"A typical homeowners policy will insure your personal possessions for between 50 (percent) and 70% of the insured value of your home," says Barry. "Some companies then limit that coverage amount on your possessions to 10% when you're away from home."
Doing the math, if your home is insured for $100,000 and your possessions are covered for half that, or $50,000, your total protection on belongings off-premises would be $5,000.
And beware: Personal property coverage also typically carries a deductible of $250, $500 or $1,000, McCummings says. Plus, insurers usually limit their liability on higher-ticket items such as jewelry and furs to between $1,000 and $2,000.
Would it make sense to try to reduce your deductible amount before a big day? "Probably not because the premium would go up so substantially that it wouldn't be worth it," says Barry.
McCummings says a better strategy might be to insure jewelry and other valuables separately.
Each year, more than half a million pieces of luggage checked by airlines are lost or stolen. That's a huge improvement over the 1 million-plus that used to be the norm just a couple of years ago, but it's little consolation if one of your bags goes missing.
In such cases, you may receive compensation from the airline. Fortunately, lost luggage also is typically insured under the off-premises coverage in your homeowners or renters insurance -- after your deductible and subject to limits, of course.
"If you pack $1,000 worth of stuff into a suitcase and that suitcase gets lost or stolen, the insurance company would just ask you for a list of contents," says McCummings. "I have never seen anybody get a claim denied because a suitcase was lost or stolen."
Still, State Farm spokesman Brad Hilliard suggests you weigh your deductible against the value of the lost contents before you call your agent.
"If you have a $500 deductible and you lost a $520 piece of equipment while you're traveling, is that worth turning in a claim when you're going to be responsible for the first 500 bucks?" he says. "Probably not."
Parking-lot theft leaves many shoppers perplexed, according to Hilliard.
"A lot of people think that gifts stolen from their car is an auto policy claim, but anything that is not directly related or attached to the car would go to their homeowners policy," he explains.
Your newly acquired treasures are typically covered under your home insurance. However, McCummings says some auto insurers have recently blurred that line by offering personal property insurance on their auto policies.
"It's a very minimal fee, probably about $25 per year, and no deductible applies on these," he says. "But you can only claim it once, and it includes limits, such as $200 for a cellphone, $1,000 for a laptop."
Before filing either type of claim, McCummings urges shoppers who purchased with plastic to check with their credit card company first.
"Some companies will cover you if you used their card to purchase the lost items (that) didn't make it home," he says. "Be sure to call them and ask if there is coverage. That way, you might avoid putting a claim against your homeowners insurance that might cause it to renew at a higher rate next year."
If you travel for business, the computer or other work-related property that you take with you can be covered under your homeowners insurance -- within a limit, often expressed as a percentage.
"So if the equipment you use for business is (normally) insured for $5,000, it would be insured for $500, or 10%, away from the premises" under your homeowners policy, McCummings explains.
He warns that if you're a road warrior who travels fully loaded with a laptop, tablet, smartphone and peripherals, don't assume a claim for one of these items will be paid under the more generous terms for personal, nonwork property.
"Say you have a super Mac laptop that you use as a clothing designer," he says. "You can go back and say, 'This is my personal computer,' but if they find out that it's something you use for work, there might be a problem."
Hilliard says it's best to avoid complications. "Give your agent a call if you're taking your laptop, camera or other equipment with you to make sure you're well covered under your (homeowners) policy. It never hurts to double-check before you head out."
Say you're on vacation at the Tournament Players Club Sawgrass golf course in Ponte Vedra Beach, Fla., when you suddenly shank a drive and either break a picture window on a fairway home or injure a fellow golfer. Are you insured?
In all likelihood, yes. Your homeowners policy should cover the broken window, the golfer's medical bills, and any legal defense for claims or lawsuits -- including court awards up to the limit of your liability coverage -- all without a deductible.
Barry says that while homeowners insurance liability limits typically start at $100,000, many homeowners feel more comfortable with $300,000 in liability coverage these days, and wealthy individuals often opt for even more under an umbrella policy.
"It's good to know your liability coverage is available when you're out of town in unfamiliar settings," adds Hilliard. "Keep the phone numbers of your agent and insurance company with you when you travel so you can contact them if something like the wayward golf shot happens."