Don’t Underestimate Your Worth
Every year during the holidays, many Americans receive gifts worth $1,000 or more or splurge on one for themselves or a household member. Whether or not they consider these high-value items’ implications for their home insurance has been an open question – until now.
Selective Insurance recently released the results of a research study it commissioned to find the answer to that very question. The research was conducted online by The Harris Poll a few days after Christmas among over 1,700 U.S. adults who have a homeowners or renters policy (defined as policyholders throughout). It g
A little over half of policyholders (53%) received or bought high-value items (worth at least $1,000 or more) during the holiday season. But fewer than two out of five of these policyholders (38%) updated or plan to update their policies to protect those items. More than four in ten (43%) say they would not update their insurance policies.
I encourage more consumers follow the lead of the policyholders that update their policies. The update can be made relatively quickly, and any increase in premium costs would likely be nominal. For example, the premium for a $5,000 designer watch will typically run about $50 annually — a small price relative to the value of the item being protected.
In fact, I would take it a step further and advise people to check their homeowners or renters policies, regardless of whether they’ve bought or received an expensive gift. It’s possible they’ll find that their possessions are not adequately covered. Here’s why:
People accumulate considerable amounts of things like clothes, furniture, and electronics over the years. The values of these items add up. I’ve seen example after example of policyholders being surprised by the combined value of their possessions. It’s been my experience that young people, especially those in their 30s, tend to underestimate their assets’ worth. I also have some personal experience with the phenomenon of dollar values sneaking up on you: My son started buying and selling comic books when he was in high school. Most of them were moderately priced. Yet, by the time he left for college, he had five boxes of comics collectively worth thousands of dollars.
If you have homeowners or renters insurance, take stock of your assets and see if your policy affords you sufficient coverage. Look at the “Personal Possessions” or “Contents Coverage” line in your policy’s declarations page. If you find that the amount doesn’t cover your assets’ value, or are not sure, call your agent.
While you’re looking over your policy, check whether your possessions are covered for “full replacement cost” or “actual cash value.” If it’s the latter, your insurer will pay you the replacement cost of an item, less depreciation. Asking your agent to change it to full replacement cost coverage will ensure that your insurance company will pay to replace the item at its current price.
Take some extra time to inventory your assets and confirm you’re adequately protected this year. Then if a cherished gift you received is lost, damaged, or stolen, you’ll be able to continue your enjoyment with a brand-new replacement.
Sharing this article from Selective; written by Allen Anderson, Selective’s Senior Vice President and Chief Underwriting Officer, Personal Lines
About the Author
Allen Anderson, Senior Vice President, Chief Underwriting Officer, Personal Lines, is responsible for all Personal Lines, Flood Insurance, and Contact Center operations across the company. Allen joined Selective in 2006. His prior experience includes 16 years with Allstate Insurance in various underwriting and product development roles. He earned a B.S. in Business Administration from Nazareth College in New York.