Homeowner's Insurance Riders: How Large Should Yours Be?

17 December 2015
 Categories: Insurance, Articles


While most standard homeowner's policy structures help insure your personal property, your protection levels are limited by the coverage amounts in the policy. Often, these are not nearly large enough to cover the loss of particularly valuable items in your home. With the rate of residential theft sitting at approximately 1 in every 36 homes each year, it's important to protect yourself.

A policy rider is how you can do exactly that--it represents additional coverage in the event of personal property loss. But, how much coverage do you actually need? To figure that out, it's important to understand how different types of items have different replacement costs.


Studies show that the average adult in the United States spends around $1,200 each year on electronics. That said, the value of the electronics in your home is likely much lower than that figure multiplied by the number of years in your home. That's because the electronics you're currently using aren't worth nearly as much today as they were when you bought them.

That makes determining your insurance levels for electronics difficult. A good strategy is to make a list of devices in your home by type instead of by value. Then, look at a few popular retail outlets and determine how much it would cost today to replace that many devices with a similar quality item.

For example, assume that you have three televisions in your home--a large one in your family room and two smaller ones in your bedrooms. Even if you paid $4,000 for those televisions, you might only need $1,500 today in order to replace them with new, similar quality items. Looking at your electronics in this way can help make sure that you don't over-insure your property by using a false replacement estimate.


Jewelry is a difficult item to factor for when determining your rider. The market value on precious metals and gems is in constant fluctuation. On top of that, in the event of a theft, your jewelry is a likely target. That's why it's so important to understand the value of your property.

If you have gold jewelry in your home, you cannot rely on your purchase price--the value of gold has risen by 500% since 1970--with spikes much higher than that. Also, in the case of heirloom jewelry, you might have no intention of even replacing it at all in the event of a loss. As a rule of thumb, you should insure replaceable jewelry for at least their materials cost, and heirloom jewelry at their value to collectors or their material cost--whichever is higher.


Collectibles that aren't made of precious metals are even more difficult to price. A baseball card that has a collectible value of $5,000 might have a materials cost of three cents. Clearly, the cost of the item to make is worthless when dealing with collectibles of all types. However, a catalog price is often theoretical--the next sale of a rare item might be much higher or lower than the last one, depending on a variety of factors.

That means the best you can do with your collections is come up with an estimate. Look for items of particular catalog value or rarity, and take note of the cost to replace those at auction. Then, add an estimated amount to that total to account for the less valuable pieces in your collection. 

If you have items in any of these categories, and you combine these values with the value of your furniture, appliances, and other costly necessities, you're likely going to exceed the coverage limits on your standard policy. The remainder should be the coverage you purchase on your rider. After all, while no one expects a total loss, you need to be sure that your standard of living is protected in the event that the unthinkable happens.

For more information on homeowners insurance, check out the site linked here.