How am I supposed to know if I have enough homeowners insurance coverage for my personal possessions?

Trying to calculate the personal property protection you need in a homeowners policy can be tricky. Personal property is a very broad field of coverage, generally including any property that belongs to the policyholder and is not included in the coverage of any other insurance policies. For example, your car would not be part of a home insurance policy because it is independently insured, but a riding mower would be covered up to the limits of the policy.

In general, home insurance policies provide personal property insurance up to a percentage of the home value, usually around 10%. If the policy is written for $200,000, for example, then there would be $20,000 in personal property insurance. And this may sound like a lot of coverage, but the truth is that most standard homeowners insurance policies fall far short of providing adequate coverage for your possessions. Because your personal property includes appliances, tools, furniture, jewelry and more, the value of a family's personal possessions can quickly add up to many tens of thousands of dollars. Making a home inventory is one of the best ways to catalog your property as well as establishing the cost of what you own.

To increase the amount of your personal property coverage, you have a couple of options. You could have the limits on your policy raised, which would mean higher premiums, or you could purchase a separate personal property policy for the amount you need. Increasing your limits is probably acceptable for most families, but it may be more financially sound to purchase a secondary policy to keep the cost of premiums down. Another factor to consider is where electronics are concerned. Insuring those items separately makes it easier to cancel, increase or otherwise modify the policy for specific devices without having to rewrite your entire homeowners policy. For things such as personal computers or smartphones, which are typically upgraded often, this method can make it much easier to change the policy after it is written.