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Personal Property Insurance -Actual Cash Value vs. Replacement Cost | Eagle Insurance

Updated: Aug 15, 2023

Personal property coverage, also known as contents coverage on a home policy, helps cover the cost of your personal items if they are destroyed, damaged, or stolen due to a covered loss or peril. Personal property includes things like furniture, clothing, electronics and kitchenware.

What is Personal Property Insurance?

Personal property insurance, also referred to as Coverage C, is the section of most standard homeowners insurance policies that helps protect your stuff (i.e. furniture, electronics, clothes) against fire, theft, and other covered perils outlined in your policy.

How Does Personal Property Coverage Work?

Most standard homeowners insurance policies offer personal property coverage equal to 50%-70% of your dwelling coverage limit. For instance, if your home is insured for $300,000, then your belongings might be covered up to $150,000. However, certain types of personal property, such as expensive valuables and business equipment typically have lower coverage limits than other types of valuables and may require additional coverage such as scheduled property coverage.

Its crucial to keep an inventory of your possessions since this will help you determine the right coverage limit for your personal property coverage. Be sure to update your inventory regularly, including receipts, pictures, and descriptions of your belongings.

What are the Two Types of Personal Property Coverage?

There are two types of loss settlements for your personal property: replacement cost value and actual cash value. With standard home insurance policies, your personal property is typically covered at its actual cash value, which means years of wear and tear on the item (depreciation) is deducted from the claim payout.

Most companies offer the option of upgrading your personal property coverage to replacement cost value. Personal property with replacement cost coverage pays to replace your belongings with new items, regardless of how old or worn they may be. If you have this level of coverage and you file a claim, the insurance company will typically pay out the actual cash value of the settlement amount first, and then the remaining amount once you purchase the replacement items.

Actual Cash Value Coverage

Replacement Cost Value Coverage

How it works

Covers your belongings at their actual cash value - meaning depreciation is deducted from your insurance claim payout

Covers your belongings with new items of similar type and quality - without deducting for depreciation

How much it costs

No extra cost - typically included with most home insurance policies

Extra cost varies by insurance company and policy

What Types of Damage Does Personal Property Insurance Cover?

The types of damage or covered perils for personal property insurance can vary by insurance company and depends on whether you have a named perils or open perils policy.

Named Perils: Most standard home insurance policies protects your personal belongings against the 16 named perils listed on the policy. This means if any of the policy named perils cause damage to your belongings, your insurance company will help cover the cost according to your policies limits.

Open Perils: On the flip side, some home insurance companies offer the option of an open peril or all risk policy. This means your belongings are protected from any type of damage as long as it's not explicitly excluded from your policy. Some causes of damage that are typically excluded from coverage in open perils policies are:

  • Damage during a move

  • Earthquakes

  • Flooding

  • Insects, rodent, pests, and pet damage

  • Mold and corrosion

  • ​Natural settling of the foundation

  • Normal wear and tear or lack of maintenance

  • Poor construction

  • Pressure from tree roots

Can I Buy Additional Personal Property Coverage for The Excluded Perils?

Most home insurance companies offer additional coverage offerings to further protect your personal property against other types of perils. Oftentimes these can be added to your existing home insurance policy, but if not, you will have to purchase a separate policy. Some of the other types of coverages that may be available in your area are: Flood Insurance, Earthquake Insurance, Equipment Breakdown Coverage.


Now that you understand more about how personal property coverage in homeowners insurance works, you’ll be in a better position to choose the right policy for protecting your belongings. Remember to review your policy regularly and update it whenever you make significant purchases or upgrades to your home. Personal property insurance may seem like an additional expense, but it’s worth the cost since it offers valuable protection for your prized possessions. Be prepared for the unexpected and protect your home’s contents with the right insurance coverage.


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