Does Homeowners Insurance Cover Theft?
If you are a victim of theft, whether inside or outside your home, your homeowners insurance coverage can assist you in replacing your stolen items. Your policy may also assist you in covering the cost of repairs to any property damaged by a thief or burglar. Some types of theft, however, are not covered by homeowners insurance. Here's what you need to know to protect yourself from financial loss in the event of theft.
When does homeowners insurance cover theft?
Personal belongings stolen inside or outside your home are typically covered by standard homeowners insurance policies. Your homeowners insurance policy would cover you if you were pick-pocketed on the street or if someone broke into your garage and stole your bike. The most important thing to understand is whether your policy covers Actual Cash Value (ACV) or Replacement Cost Value (RCV) (RCV).
ACV reimburses you for the current market value of your damaged or stolen item, whereas RCV reimburses you for the cost of replacing the same product in the current market.
- For example, if you purchased your television five years ago, the actual cash value may be $700 due to depreciation. In today's market, however, a new TV with the same features might cost $1,200.
The type of homeowners insurance policy you initially purchased determines whether you are reimbursed for ACV or RCV.
As we'll see later, some high-value items have a cap on how much you can be reimbursed if they're stolen. Musical instruments, jewelry, electronics, and cash are some examples.
Who is protected from theft under your home insurance policy?
Personal possessions of people listed under your policy, such as a spouse, child, or anyone else you name on the policy, are also protected against theft. This includes people who live in different residences. If your child is away at college, they will be protected from theft if their dorm room electronics or belongings are stolen. You should consult an agent for specifics, but once your child moves into their own home (rather than campus housing), they will no longer be covered by your home insurance.
Does homeowners insurance cover break-ins?
Break-in losses are classified into two types, and both are typically covered by home insurance companies. The first is the loss of personal belongings such as laptops and televisions. This type of loss is covered in the same way that we discussed previously.
The second type of loss is physical damage to your home or detached buildings. A burglar, for example, could kick in, pry off, or otherwise damage your home's doors, windows, locks, and other areas. Some may seek out the home's copper pipes to resell on the metals market. Your insurance policy may cover the cost of such repairs. Any water damage caused by the ruptured pipes as a result of copper theft would also be claimable under your policy.
What types of theft doesn't your homeowners policy cover?
With a few exceptions and caveats, your homeowners insurance will cover almost everything that can be stolen. Some items are more expensive to replace than others, and as a result, standard insurance policies limit the dollar amounts they will reimburse if these items are stolen—cash and jewelry are two common examples.
If your car is stolen, your homeowners insurance will not cover the cost. To be covered for car theft, you must have comprehensive insurance through an auto policy.
Homeowners insurance and stolen cash and jewelry
A homeowners policy will reimburse you for lost money up to a certain dollar amount. This limit is usually around $200.
- For example, suppose someone steals your purse from the back of your chair during a holiday, taking $500 in cash. Homeowners insurance would cover you for only $200. The issue with that is if you have a $500 deductible to meet. It would be pointless to file that claim because you do not meet the eligibility requirements.
Jewelry is another high-value item that will be covered only to a certain extent.
- Your wedding ring, for example, could be worth $10,000. However, if it is stolen, standard homeowners insurance typically only covers up to $2,000.
If you own jewelry, antiques, art, coins, or other valuables worth $5,000 or more, you should think about getting a "personal floater" policy. This coverage can be added to your primary homeowners policy to help you insure unusually valuable or rare items.
Homeowners insurance doesn't cover car theft
To be covered if your car is stolen, you must have comprehensive insurance on your car insurance policy. Despite being a personal property or a belonging, a car is classified by insurers as a completely different type of possession and has its own insurance product.
One significant exception is if your personal belongings were stolen from your car. If your luggage or other belongings were stolen from your car, you can make a claim under your homeowners insurance.
Homeowners insurance discounts for theft-proofing your house
Taking steps to make your home "theft-proof" can result in savings on your homeowners insurance. Many home insurance companies offer discounts ranging from 2% to 15% off premiums if you burglar-proof your home.
You can earn the discounts by doing the following:
- Use deadbolt locks rated "Grade 1" by the American National Standards Institute on your doors (ANSI)
- Install burglar alarms that are linked to the local police.
- Install motion sensors around the outside of your house.
Installing these measures may cost you money. However, you should weigh the cost of installation against the savings from the discount. To obtain an exact amount for the discount, contact your agent or homeowners insurance company.