Does Homeowners Insurance Cover Theft?

Home insurance can help replace stolen belongings

 couple deals with a homeowners claim for stolen property
•••

Westend61 / Getty Images

Homeowners insurance provides a wide range of protections. It can help repair or replace your home if it’s damaged in a fire or windstorm and cover medical expenses if someone sustains an injury on your property. Standard home insurance policies also protect your personal belongings, including losses that occur due to theft.

Your homeowners policy protects your belongings when they’re in your home and may also provide limited protection when you place items in storage or take them on vacation. But insurance companies place limits on the amount of money they will pay for certain types of personal property.

Before buying a home insurance policy, it’s important to understand which types of theft it will and will not cover.

Key Takeaways

  • The personal property coverage of a homeowners policy covers theft of most items stolen from your house.
  • Personal property coverage may also provide limited protection for belongings when they aren’t located on the covered property.
  • Insurers set coverage limits on certain types of stolen personal belongings.
  • You can add an endorsement or rider to your standard home insurance policy to increase protection for valuable items such as artwork, jewelry, or musical instruments.

Does Homeowners Insurance Cover Theft?

Most home insurance policies cover theft of personal property such as clothing, computers, electronic equipment, and furniture. Personal property coverage also extends to items in detached structures on your property, such as a shed. Typically, homeowners insurance also provides coverage, with limitations, for personal items stolen from offsite storage units, hotels, or your car.

Insurance companies set your personal property limit based on a percentage of your dwelling coverage, typically starting at 50%. For example, if a policy has $200,000 in dwelling coverage, it might include $100,000 in personal property coverage. But you can sometimes change the personal property limit to fit your needs. Before buying a homeowners policy, take a comprehensive inventory of your personal belongings and determine how much they will cost to replace. 

If thieves damage your home during a break-in, your policy’s dwelling coverage can help pay to replace broken doors or windows. Dwelling coverage also covers vandalism. So, if a burglar breaks into your home, steals cash and jewelry, and vandalizes your walls with spray paint, you can file a claim against your personal property coverage for stolen items and your dwelling coverage for damages to your house.

What Are the Limits of Theft Coverage?

Your policy will include a certain level of coverage for personal property, often 50% of your dwelling coverage. But insurers set limits on what they will pay for some types of belongings.

Limits for Certain Types of Personal Property

Your homeowners policy doesn’t offer a blanket amount of coverage for all your personal property. Instead, it sets limits based on what is stolen or damaged. Here’s an example of limits from a Nevada homeowners policy from The Hartford:

  • Banknotes and coins - $200
  • Residential property primarily used for business- $2,500 ($500 for business property stolen away from the insured premises)
  • Firearms - $2,500
  • Furs, jewelry, and watches - $1,500
  • Goldware and silverware - $2,500
  • Passports, personal records, stamps, securities, and tickets - $1,500
  • Trailers - $1,500
  • Watercraft, including their engines and trailers - $1,500

Although many home insurance policies cover items stolen from off-premises locations such as a storage unit or hotel room, providers may limit the amount they will pay to 10% of your total personal property coverage. So, if a thief steals $20,000 worth of stored furniture and your policy includes $50,000 in personal property coverage, the insurance company will likely only pay $5,000 for the loss.

The HO-3 or “Special Form” homeowners policy is the most popular form of coverage. It covers damages caused by all types of perils–like fire, theft, vandalism, and windstorms–unless specifically excluded in the policy terms.

Actual Cash Value vs. Replacement-Cost Coverage

Most standard home insurance policies pay actual cash value for stolen personal property. An item’s actual cash value is its market value for its age and condition, which decreases due to depreciation. So if you bought an area rug for $1,200 five years ago, it may only have an actual cash value of a few hundred dollars today.

Replacement-cost coverage, on the other hand, provides you a payout that will cover the cost of replacing the lost item with a new one. 

When Is Theft Not Covered by Homeowners Insurance? 

Typically, providers won’t cover stolen personal property in a home left vacant for a certain specified period. For instance, if you leave your home vacant to go on a year-long trip around the world and thieves make off with all your possessions, the insurance company may deny your claim or cancel your policy.

Exclusions

Most standard home insurance policies won’t pay for losses of certain types of property, including:

  • Aircraft (may cover hobby aircraft not designed to carry cargo or people) and hovercraft
  • Most automobiles, including their accessories and equipment
  • Business data, including paper records
  • Credit cards
  • Property covered by another insurance policy
  • Property of renters who aren’t related to the insured
  • Pets
  • Rental equipment stored off premises

Insuring Excluded Property

Just because a possession is excluded from your home insurance coverage doesn’t mean you can’t protect it. Insurers offer policies for a wide range of property.

For many people, homes and automobiles are their most valuable possessions. If thieves steal personal possessions from your house and car, your home insurance policy might cover all losses. But if they steal permanently installed equipment from your vehicle, like a stereo system, or the automobile itself, you’ll likely need to rely on your auto insurance policy’s comprehensive coverage to pay those losses. 

Many insurers that operate nationwide offer insurance policies to meet most people’s needs. If you purchase auto and home insurance from the same carrier, they may also offer coverage for your:

  • Boat
  • Business
  • Motorcycle
  • Motorhome
  • Off-road vehicle
  • Pet 

Alternative Ways To Protect Against Theft Loss 

Limits on certain types of personal items may leave some of your belongings underinsured. For example, if you have a wedding ring valued at $5,000, and your home insurance only provides up to $1,500 in protection, you’ll need additional coverage.

Valuable Items Endorsements

Many carriers offer valuable items coverage, sometimes called “scheduled personal property coverage,” which you can add as a rider to your homeowners policy. You can buy valuable items coverage for numerous valuables, including:

  • Antiques and artwork
  • Cameras
  • Coin and stamp collections
  • Firearms
  • Musical instruments 

Other Types of Protection 

Manufacturers of expensive products such as computers and high-end cellphones often offer extended warranty packages. These types of packages often go beyond damage protection, also offering loss and theft protection.

Your credit card may also offer a certain amount of purchase protection for goods you buy using the card. However, credit card insurance often offers secondary protection, which only pays after you’ve reached your primary insurer’s limit. For instance, if you used your credit card to buy a $2,000 watch and your insurance pays $1,500 after the watch is stolen, your credit card’s protection may pay the difference.

Anti-Theft Measures

You can take many steps to prevent thieves from stealing personal property from your home.

  • Install motion sensor lights along the front, sides, and rear of your house.
  • Install a burglar alarm system that alerts a central station when triggered.
  • Install window locks and deadbolt locks on doors.
  • Trim bushes and trees around windows to eliminate hiding places.
  • Avoid leaving valuables such as lawnmowers unguarded in your yard, even for a few minutes.
  • Avoid placing valuables such as expensive artwork and entertainment systems in locations that people can see them through uncovered windows.
  • Consider getting a dog to deter intruders.

It’s also good to understand the way thieves operate. Burglars often target bedrooms, looking for items such as cash and jewelry. They also steal electronic and gaming systems from family rooms, and computers and checkbooks from home offices. Within your home, hide valuables in places that thieves may not think to look. Lock valuables in desk drawers or install a safe to protect your most prized possessions. 

Frequently Asked Questions (FAQs)

How much does homeowners insurance cover for theft?

Insurance companies set your property damage limit based on a percentage of your dwelling coverage, usually around 50%. So, if your policy features $500,000 in dwelling coverage, it will provide $250,000 in personal property protection. But some insurers will allow you to adjust your personal property limit to fit your needs.

How much Is homeowners insurance?

In 2021, U.S. homeowners will pay an average annual home insurance premium of $2,285. But homeowners rates are based on personal aspects such as your home’s age, location, construction type, location, your home’s claims history, and the deductible you choose. For accurate rates, contact a few insurance companies and request a quote.

Which areas are not protected by most homeowners insurance?

Home insurance policies may not cover theft of aircraft, automobiles, business data, or pets. To find out what your coverage includes and excludes, review the personal property (Coverage C) section of your insurance policy.