Personal Property – Who Insures it & When?

Insurance can be a very confusing product at times. I recently heard of a person who just had thousands of dollars of very expensive computer equipment stolen out of the back seat of his car. He called his auto insurance company to file a claim, but they told him if he wanted to file a claim on this property, he had to do it through his home insurance. Does this make any sense at all? Certainly not to the average American it doesn’t. But when you start to understand exactly how car insurance and home insurance work, it starts to make a little more sense.

Car insurance and Personal Property

The primary purposes of car insurance are 1) protect others from negligent actions of other drivers through liability coverage, 2) protect the vehicle of the insured from damage through collision and comprehensive coverage, 3) protect the insured from drivers who don’t have insurance through uninsured and underinsured motorist, and 4) protect the insured and passengers from minor injuries through personal injury protection and medical payments.

If you look carefully through the four main purposes of car insurance, nowhere in those definitions is any mention of personal property like computers, watches, GPS systems, shoes, etc. In fact, almost all car insurance policies in the United States have absolutely no coverage for personal property! Even if you wanted to add personal property coverage on your car insurance, over 90% of the companies out there don’t even offer it. This may shock some people, but car insurance has always been about just the vehicle and injuries sustained by those who travel in the vehicle. As companies try to differentiate themselves in the future, we may start to see companies offer more personal property coverage, but to date this has not been the case.

Home insurance and Personal Property

Home insurance is much more extensive than car insurance. Home insurance insures a myriad of things; the dwelling, structures on the property, personal property, loss of use, medical payments, even liability events that happen on and off the property. In addition, home insurance can also insure grave markers, debris removal and more.

If you look carefully through a home insurance policy, you will also find a clause that mentions insuring personal property that is off-premise, or away from the home that is being insured. Most home insurance policies will insure property that is not on the property of the insured when it gets stolen. Every company handles this a little differently, but the point is if you have home insurance, you most likely have some sort of insurance that is insuring your belongings that are currently in your car, on your boat, or in the hotel room where you are staying for the night.

So in the example I gave above, had the man not had a home insurance policy, he never would have been able to file an insurance claim and eventually get his computer equipment replaced! Fortunately for him, this wasn’t a big deal, but may be a hard lesson for someone to learn that doesn’t have home insurance.