Dealing with a theft claim can be daunting, but policyholders can make matters easier for themselves. The process of navigating through an insurance claim is tedious and frustrating, and those frustrations are exacerbated while feeling the pain in knowing that your valued belongings have been stolen.
Most homeowner policies provide coverage for theft, but merely having personal property coverage does not translate to a smooth and seamless encounter with your insurer. To protect your interests, it is advisable to take the following steps:
Review Your Policy
Your policy declarations page states the available limit for “personal property” coverage. However, most policies contain “sublimits” (or “limits of liability”) that apply to certain belongings, and depending on each insurer, the sublimits substantially reduce the amount of available coverage for such items as jewelry and watches, gold and silver, cash, collectibles, firearms, antiques, artwork, and so forth. If you have belongings at home that are subject to a stated sublimit and are interested in having adequate coverage for such belongings, you have the option of purchasing a “Rider.”
An insurance rider is an optional add-on that can be attached to your existing insurance policy to modify its coverage for certain belongings. Riders allow policyholders to itemize contents that would typically be subject to a policy sublimit and, in turn, secure adequate coverage in the event of a theft. However, the added premiums charged for a rider can be expensive; therefore, it is not a viable option for all policyholders. Nonetheless, all policyholders should become familiar with policy limitations that apply to certain items of personal property.
Photographic Documentation
Our office is regularly contacted by policyholders seeking consultation because their insurer has refused to extend coverage for a theft claim that cannot be substantiated.
For example, you claim expensive camera equipment that was gifted to you, but are unable to establish proof of ownership. In such scenarios, your insurer cannot confirm the veracity of the claim, and insurers most certainly do not adjust claims by relying on the honor system! As such, it is highly advisable for all homeowners to photo-document the interior of their residence, and specifically, their personal belongings. Photographs may not be fully sufficient to secure coverage in every circumstance, but at the least, they serve as some form of proof of ownership.
Photographic documentation of the interior of your home can also assist in other types of claims. Suppose you spend $20,000 for the installation of customized cabinetry that sustains irreversible damage caused by a fire, and do not have a copy of a contract with a general contractor for the cost of construction and installation (because you hired a handyman and paid in cash). How can you demonstrate to your insurer that there was, in fact, a customized $20,000 cabinet that has now been destroyed by fire, and secure the amount of coverage sought? Photographs!
Strong photographic evidence streamlines the claims process and minimizes the likelihood of disputes with your insurer.
Save Your Purchase Receipts
When making a purchase, especially for high-value items, make it a rule to save your purchase receipts. Insurers will ask you to provide proof that you, in fact, owned the items being claimed as stolen. As such, policyholders should be mindful of preserving documentation that proves purchase and ownership.
The most meaningful proof of ownership is the original purchase receipt.
Notify the Police
Most insurers require their policyholders to report a theft to law enforcement. Do not fall victim to the same mistake many property owners make by neglecting to contact the police as soon as possible.
Additionally, be mindful that the estimated value of the belongings you report to the police can subsequently impact the processing of your insurance claim. If you state to the police that, for example, $50,000 in belongings was stolen and later discover an additional $25,000 in stolen belongings that you were unaware of, the discrepancy between the information on your police report and what you report to your insurer can trigger an investigation, cause delays in the processing of your claim, and might ultimately lead to a full or partial denial of coverage.
Do not rush into providing an estimated dollar figure to the police until you have conducted a thorough check of your home.
Safeguard Provisions
Insurance policies may contain safeguard provisions, which are clauses that require the policyholder to maintain certain protective measures or risk-mitigation systems as a condition to coverage (such as a security system).
At the time of applying for insurance coverage, you may be asked whether your home contains a security system, such as an alarm or security cameras. If you answer “yes” on your application, you may be entitled to a reduction of your insurance premiums, which is a good thing. However, be mindful that if you file a theft claim and, after investigating, your insurer determines that at the time of the theft, your alarm system or security cameras were not in proper working condition, your claim may be subject to a denial of coverage.
Therefore, it is imperative for you to check your policy for any applicable safeguard provisions, as well as your responsibility to maintain your home, particularly your security system, in the event of a theft.
Many commercial and residential policies covering high net worth items require protective safeguards. For those interested in reading more on the topic, we suggest reading Protective Safeguard Endorsements – A Warning Every Policyholder Should Receive About Protective Safeguards.
To recap:
- Review your policy for sub-limits that apply to personal property
- Take photos of the interior of your home, including your personal property
- Maintain purchase receipts
- Notify the police
- Check your policy for protective safeguard provisions
- Ensure that your security system is functioning properly
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