Most of us are aware of the fact that there are limits to the amount an insurance policy covers for different types of property. A well-known example is jewelry coverage. Some of these limits appear in the ‘personal property limit’ section of your policy. There are, however, other limits known as ‘special limits of liability that often appear in less obvious sections of the policy document. Unless you familiarize yourself with these limits, you could end up feeling shortchanged in the event of a claim.
What Exactly is Meant by The Term Special Limit of Liability?
This term refers to the maximum amount the insurance company will pay out for certain losses. It often appears in home insurance, renters insurance, and condo insurance policies.
A good example is when you have jewelry worth $50,000 and cash to the amount of $20,000 in your home. If you were to have a loss, you might end up getting only a relatively small amount in the event of a claim.
This could happen because somewhere in the policy document it was stipulated that jewelry and cash are only covered to a specific maximum amount.
The only way to prevent disappointment in the event of a claim is to know exactly what your insurance policy covers and to schedule items that are not fully covered on a special endorsement or rider.
Where Can One Find the Special Limits in Your Insurance Policy?
In a standard homeowner policy, these limits can be found under the “Coverage C: Personal Property” heading. A similar practice is normally followed in renters or condo insurance policies.
10 Special Limits Everyone Should Know About
Make sure you understand the implications of these special limits and if you need higher coverage, talk to your insurance agency.
Jewelry, Watches, and Precious Stones
This might be the most common special limit. It places a maximum on the amount the insurer will pay out for jewelry, watches, precious (and semi-precious) stones, and furs in case of theft.
This section will, therefore, determine how much the insurance agency pays out if your wedding ring is stolen. If you e.g. have a wedding ring that cost $25,000 and your standard policy only covers $2,000, you may want to purchase separate insurance or a rider to cover the difference.
This covers banknotes, bills, coins, smart cards, stored-value cards, and even certain precious metals.
Silver, Platinum-ware, Gold, And Plated-ware
It’s probably less common today to own valuables like these than a hundred years ago. If you do, however, and the maximum amount stipulated in this section is insufficient, consider buying additional insurance.
This section sets out the coverage you have for firearms plus all related equipment.
Fine Art, Collections, and Collectibles
Items like these might not appear in the policy’s Special Limits of Insurance section – you might have to search to find them. If you own expensive items that belong in any of these categories, make sure that you discuss the situation with your insurance agent to make 100% sure they are covered, and for how much.
Accounts and Securities
Here we are referring to things like evidence of debt, deeds, notes, letters of credit, personal records, manuscripts, tickets, passports, and stamps.
On-Premises versus. Off-Premises
In the case of property that is used primarily for business purposes, this section will typically have separate limits for ‘on-premises’ and ‘off-premises’ usage. For off-premises use, the coverage might be as little as $500. If you need more, you might have to increase your coverage.
What is particularly important in this regard is that if you run any type of business from home, your insurance agency must know about it, or your coverage might become null and void.
Scrutinize your policy for special limits on items like computers, tablets, smartphones, gaming consoles and other electronic devices, sports equipment, and bicycles. Increase the coverage where needed.
Vacating or Renting Your Property
While it does not technically fall under the “Special Limits” description, it is worth mentioning that if you vacate your home for 30-days of more, or if you rent out your property to others, there will be an automatic decrease in coverage. So, if you have plans to leave your home for an extended period of time, or rent it out, be sure to reach out to us so we can make adjustments and keep you properly covered.
Final Words: Help Is at Your Fingertips
Reviewing the special limits of your insurance policy could one day save you a significant amount of money. And discussing anything that is not immediately clear with one of our agents is a great way to make sure that your possessions are in fact covered for the amounts you believe they are.