According to the FBI, there were a reported 522,426 burglaries reported in 2020 alone. And, if you’re a homeowner or renter, it’s probably one of your biggest anxieties. A home break-in can do some serious financial damage and take a large emotional toll.
However, there are some exceptions to be mindful of—theft insurance is not a one-size-fits-all policy. Depending on your belongings and circumstances, like whether or not you live in a construction zone, you may not always be covered for theft.
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What is theft insurance?
Theft insurance is a part of your insurance policy that provides coverage for your personal property or possessions if they are stolen from your home. If the worst happens and someone breaks in and takes things, you can receive either a reimbursement or the
actual cash value(ACV) for your items.
A reimbursement will compensate you for the replacement cost of a new item, while actual cash value will only get you what your item is worth today. Let’s say, as an example, that your PlayStation from 2012 was taken during a burglary. Your insurance provider can either provide you with the cost to replace it with this year’s newest model, a reimbursement; or give you what you paid for it in 2012, the actual cash value.
Theft is a
named perilin your insurance policy—meaning it is a standard part of home and renters insurance plans.
What does theft insurance cover?
You may be surprised to learn that theft insurance extends beyond just the things inside your home or rented space.
Theft of possessions during a break-in
This is probably the first thing you think of when you think of your theft insurance coverage. What exactly you’re covered for here, however, will vary depending on your specific policy.
As a rule of thumb, your home or renters insurance will cover your personal property at 40 to 75% of your total policy. For instance, if your home is insured for $200,000, and your renters or home insurance policy will cover 50% of that for your belongings, you will be protected for $100,000 worth of personal property.
As we mentioned earlier, you can either receive the cost of replacement or the actual cash value for your stolen items. To find out which you’re covered for, you’ll have to look over your insurance policy.
Damage to your home
If you are a homeowner, your theft insurance policy will also cover any structural damage that occurs to your home during a break-in. If the thieves kick down your door, smash your windows, or cut a hole in your roof and enter like Bond movie villains, your homeowners insurance policy will help pay for the damages to these parts of your home.
This is not something renters have to concern themselves with. Your landlord likely has insurance on the building itself that will cover these structural damages. Because you do not own the building, you are not financially responsible for insuring it.
Damage to your property structures
This, too, is something only homeowners really need to think about. Renters, skip ahead!
Your additional property structures, like a shed or any fencing you have in your yard, will also be covered in the event of a home burglary. If they become damaged during a break-in, your homeowners insurance can help you with the cost of replacing or repairing them.
What does theft insurance not cover?
Theft insurance is not without its limits. Just because it is part of your home or renters insurance policy does mean that all of your belongings are 100% covered 100% of the time.
- Jewelry and other valuables. Your home or renters insurance provider will cover your items up to a certain value, generally around $1,500. If you have belongings like jewelry, art, or electronics that are worth more, you should consider purchasing some additional coverage.
- Constructionzones. Living somewhere that is under construction also messes with your theft coverage. Insurance operates by protecting you from unforeseen risks, and by living in a construction zone, you assume the responsibility of living in a higher-risk area.
- Subletters. It’s the same principle as living in a construction zone—you assume the risk of theft by taking on a subletter. So if your friend’s cousin’s boyfriend makes off with your laptop while subletting your place, you may be out of luck with your insurance provider.
Do I need additional theft insurance?
Whether or not you need additional theft insurance completely depends on your specific insurance plan. In particular, you’ll want to take a look at your coverage limit and the total value of your belongings.
Insurance is all about being on the safe side. So, in general, your insurance coverage should be more than the total value of your belongings—that way, you won’t be short-handed in the event of a worst-case scenario.
A good way to get a rough estimate of how much additional theft insurance you need is to tally up the total value of your property. You don’t need to have an exact number, but it’s helpful to make a list of your belongings and calculate the total cost of what it would be to replace them.
The same goes for your additional property structures if you’re a homeowner. If you’ve just poured a lot of money into your she-shed, you want to make sure that you’re protecting your investment.
Key takeaway How much theft insurance you need really boils down to how much—or how little—you’d like to protect. To keep it simple, more valuables = more insurance.
Protect yourself from the unexpected
In the United States, it is estimated that 4,800 break-ins occur every day—that’s roughly one every 18 seconds. Just think about how many robberies have occurred while you were reading this article!
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