# Personal Property for Insurance: Definition, Examples, and Coverage

## What Is Personal Property?

Personal property encompasses assets other than [real estate](https://www.investopedia.com/terms/r/realestate.asp), characterized as movable, including furniture, electronics, and digital assets. Unlike real estate, personal property is not fixed to a location, affecting its [taxation](https://www.investopedia.com/persoal-property-tax-5192669) and insurance coverage. Learn how it plays a crucial role in homeowner insurance and valuation for loans.

### Key Takeaways

*   Personal property includes movable assets like furniture, electronics, and clothing, distinct from real estate.  
    
*   Homeowners insurance often covers personal property at 50% to 70% of a dwelling's value.  
    
*   Personal property can be insured for its replacement value or its depreciated actual cash value.  
    
*   Intangible personal property includes digital assets and intellectual property, while tangible property covers physical items like vehicles and furniture.  
    
*   Creating an inventory of personal belongings can streamline the claims process in the event of loss or damage.

## A Deeper Dive Into Personal Property

Personal property is also known as movable property, movables, and chattels. Because it is viewed as an [asset](https://www.investopedia.com/terms/a/asset.asp), it may be taken into consideration by a mortgage lender when someone applies for a mortgage or other loan. 

> **Important**
>
> Personal property can be insured by its current value, considering depreciation, or by its replacement cost with a new item.

Items like appliances, clothing, and cars usually lose value over time. In contrast, artworks and antiques often increase in value. Lenders assess a borrower's [creditworthiness](https://www.investopedia.com/terms/c/credit-worthiness.asp) by considering the current value of their personal and real property.

Personal property is either tangible or intangible. Examples of [tangible personal property](https://www.investopedia.com/terms/t/tangible-personal-property.asp) include vehicles, furniture, boats, and collectibles. [Digital assets](https://www.investopedia.com/terms/d/digital-asset-framework.asp), patents, and intellectual property are [intangible](https://www.investopedia.com/terms/i/intangibleasset.asp) personal property.

Just as some loans—mortgages, for example—are secured by real property like a house, some loans are secured by personal property. A common example is car loans, where the vehicle serves as [collateral](https://www.investopedia.com/terms/c/collateral.asp) for the loan.

## How Personal Property Affects Your Insurance Coverage

Personal property is a key factor in home insurance. A [homeowners insurance](https://www.investopedia.com/terms/h/homeowners-insurance.asp) policy typically covers both the physical dwelling and the owner's personal property, often referred to as the home's "contents."

It's important to create a list of your personal belongings, which might include:  

*   Rugs
*   Decor
*   Dishes  
    
*   Jewelry
*   Clothing
*   Furniture
*   Appliances
*   Electronics
*   Garage items, including tools, lawnmower, and snowblower

> **Tip**
>
> Create a home inventory list of your personal belongings for each room in case you need to make a claim. Take pictures or shoot a video, and don't forget the closets, drawers, garage, and shed.

### Insurance Coverage

Most homeowners policies base the value of the policyholder's personal property on a percentage of the dwelling's value, typically 50% to 70%. For example, if a home costs $200,000 to rebuild following a fire, the policy might use 70% of that figure, or $140,000, as the coverage limit for the owner's personal property.

### Replacement Value vs. Actual Cash Value

Homeowners policyholders can typically choose between two options for covering their personal property: [replacement value](https://www.investopedia.com/terms/r/replacementcost.asp) or [actual cash value](https://www.investopedia.com/terms/a/actual-cash-value.asp). If the policy provides for replacement value, the insurer would be obligated to replace a destroyed item with a similar new item.

With actual cash value, the insurer may pay you the item's value after [depreciating](https://www.investopedia.com/terms/d/depreciation.asp) it. In other words, the item's value is reduced to reflect its age, which means you'll likely be paid less than the cost to replace it. You can also add a [recoverable depreciation clause](https://www.investopedia.com/articles/taxes/090116/recoverable-depreciation-how-it-works.asp) to your policy, which pays out the depreciated and calculated replacement cash values.

For example, if a 10-year-old refrigerator is destroyed in a house fire, a homeowner with replacement coverage should receive enough money to buy a new refrigerator. However, a homeowner with actual cost coverage would receive an amount based on the insurance company's estimated value of a 10-year-old refrigerator.

## Important Factors to Consider for Personal Property Insurance

In the event that their personal property is destroyed, policyholders must file a claim with their insurance company describing what they lost. For that reason, homeowners should make an inventory of their personal property, ideally with photos and receipts, and store it safely off-premises, just in case it's ever needed.

Homeowners' policies often limit coverage for items like jewelry and computers. For example, a policy may limit its coverage of jewelry to $1,500. If jewelry is worth more, policyholders can pay extra to increase limits or buy a [floater](https://www.investopedia.com/terms/f/floaterinsurance.asp) to cover full value.

## What Are Examples of Personal Belongings?

Personal belongings covered by homeowners insurance may include furniture, appliances, dishes, rugs, electronics, lamps, curtains, jewelry, clothing, tools, and outdoor equipment.

## What Is the Difference Between Personal Property Insurance and Personal Liability Insurance?

Personal property insurance compensates you financially for belongings covered by your policy. [Personal liability insurance](https://www.investopedia.com/terms/c/comprehensive-personal-liability.asp) provides coverage if you are found liable for harm to another person while they are on your property.

## What's the Difference Between Replacement Cost and Actual Cash Value?

Replacement cost value means your homeowner's insurance policy will pay you the amount needed to replace the covered item at its current market value. With actual cash value, the insurer will pay you the item's depreciated value, which is reduced to reflect its age.

## The Bottom Line

Personal property includes both tangible items like furniture and appliances, and intangible assets such as digital assets and intellectual property. Understanding your homeowner's insurance policy is crucial, as it generally covers personal property based on a percentage of your dwelling's value.

To maximize your insurance benefits, maintain a detailed inventory of your personal belongings, complete with photos and receipts, stored securely. This preparation is essential for navigating insurance claims effectively and ensuring adequate compensation.

> **Article Sources**
>
> 1.  Texas Department of Insurance. "[A Home Inventory: Why You Need It and How to Do It](https://www.tdi.texas.gov/tips/home-inventory.html)."
>     
> 2.  Insurance Information Institute. "[How Much Homeowners Insurance Do I Need?](https://www.iii.org/article/how-much-homeowners-insurance-do-you-need)"
>     
> 3.  South Carolina Department of Insurance. "[Understanding Basic Homeowners Insurance](https://doi.sc.gov/963/Understanding-Basic-Homeowners-Insurance)."
>     
> 4.  Commonwealth of Massachusetts. "[Understanding Home Insurance](https://www.mass.gov/info-details/understanding-home-insurance#damage-to-real-property-)."