Those Sneaky Sublimits

The property in your home is insured for a set amount of personal property. However, did you know that just because you have X amount of dollars of insurance on that property, other limits apply in the event of a loss? Find out what sublimits are, and how they can affect your settlement come claim time!

Sublimits are in all standard homeowners' policies, and are applied by category.  These sublimits come into play when there is a loss on personal property. There is a sublimit assigned to different categories of items (see below), and they limit coverage of that category to the amount selected for the sublimit. 

The following is a non-exclusive list containing many of the probable coverages that may be subject to a sublimit:

• Money, Bank Notes, Gold, Silver, Platinum

• Securities, Deeds, Passports, Tickets, Stamps

• Watercraft & Equipment

• Musical Instruments

• Trailers (non-watercraft)

• Jewelry, Watches, and Furs

• Firearms & Equipment

• Silverware & Goldware

• Trees, Shrubs, & Other Plants (subject to a % of Coverage A, and a per-item limit)

• Fire Department Service Charge

• Grave Markers

• Land Stabilization

• Ordinance or Law

• Refrigerated Products

• Electronic Media

• Fire Extinguisher Recharge/Replacement

• Increased Day Care Expense

• Computer Records

• Fungi/Wet Rot/Dry Rot/Bacteria Coverage

• Damage to Property of Others

The total sublimit of each category ranges from insurer to insurer. Some insurers will allow you to change the sublimits, some will not. The typical range of the sublimit is from $500-$5000, but there are exceptions, and ways to increase the amount past that. Depending on the insurer, some of the aforementioned coverages might be simply excluded altogether. 

Example Claim-Scenarios Involving Sublimits

Let's say (tragically) your house and all of your belongings burnt down. Let's also say you had a fine watch collection worth $50K. Almost all policies have a sublimit on jewelry/watches, and your policy (for this example) had a sublimit of $5K. You probably have other jewelry and your spouse or children may have watches and jewelry as well. That's an unpaid loss of over $45K.

Another example (and this one is a more intricate one) is the sublimit for your trees, plants, and shrubs. This coverage has a total limit of (typically) 10% of your Coverage A (the total value of your home). So if you have your home insured for $150K, you have a total coverage of $15K. Another sublimit is typically applied as a per-item limit, so for this example, your per-item limit is $500. Now if a fire engulfs your yard, replacing any of your rare plants/shrubs or re-planting your 20+ year old trees can get expensive, very fast. For example, a four-foot tall blue spruce can cost over $600 a piece! So you're looking at only being able to afford to replant saplings, and only up to the $15K total limit.

How Do I Make Sure I'm Properly Covered?

As I mentioned above, some insurers will allow you to increase the amount of the sublimit. Unless you have a large collection, or one or many high-value pieces, simply increasing the sublimit for that category will adequately cover you. If your insurer won't allow you to increase the sublimit to an adequate level, (which is often the case if you have a sizable amount) you can schedule your property. By scheduling your property, you can individually insure your high-valued items to properly cover them.

Another caveat to being properly covered is knowing whether or not your personal property is insured for Replacement Cost or Actual Cash Value. The difference between Replacement Cost and Actual Cash Value valuations can be the difference of hundreds or thousands of dollars. 

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.