Personal Property Insurance - What Counts As Personal Property?

There are many terms people use to describe the items in their home and/or business. Personal property, contents, belongings, chattel and assets are the terms used interchangeably. Investopedia.com provides this definition: "A type of property which, in its most general definition, can include any asset other than real estate. The distinguishing factor... is that personal property is movable. That is, the asset is not fixed permanently to one location as with real property such as land or buildings."

Let's visualize a building, whether it's your house, apartment or business. Imagine cutting the roof off and lifting the building up in the air. Now, turn it upside down and shake it. Everything that falls out is personal property. It's that simple to determine what falls under this category and what will be covered under that section of your insurance policy.

Therefore, all of the items in your home, apartment, or business that are furniture, electronics, appliances, clothing, jewelry, toys, tools, decorative items, etc., are all personal property.

This is a common discussion I have with our inventory clients. Often when providing this service, we're asked to make sure we get photos of built-in bookcases, their newly installed granite kitchen counter tops, their closet organizer system or brand-new hardwood floors. We always take the time to explain the turn-your-house-upside-down scenario to our clients. Until this discussion, many didn't realize that all other items - the ones that do not fall out when flipping the building upside down - are considered part of the structure.

In addition to the items listed above, built-in appliances, carpet and other flooring, kitchen cupboards, closet organizers that are built in, light fixtures, fireplace mantles, and other items like these, are not personal property.

Now that we've covered what counts as personal property, why is it important to know this? Your homeowners insurance is divided into two sections. One is the structure insurance and the other is the personal property insurance. (This is also what is covered when you purchase renter's insurance.)

Another key reason to understand how your insurance policy covers your contents is to help determine if you're property insured. When you create your home inventory, it's important to remember what is considered personal property and what is considered part of the structure. If you list the items noted above, it will inflate the value of your contents, thus you might purchase more insurance than is necessary.

Having this knowledge will help ensure you are neither under- or over-insured.

Cindy Hartman is Co-Founder of Hartman Inventory Systems LLC, a complete personal property inventory turnkey business package. This franchise alternative guarantees success when following the established program. It provides all the tools and resources needed to start and grow an inventory service company. Major components are hands-on training, national certification, complete marketing package, life/business coaching program, guaranteed market area, and continued support. She and her husband also provide personal property inventory services through Hartman Inventory LLC, a woman-owned business.