If the belongings in your home are damaged or destroyed by a covered event, your insurance company will cover them up to the limits of your personal property coverage. Exactly how much you receive will depend on the options you chose when you purchased your home insurance policy.

Repair Cost

Your home insurance company may pay to repair your belongings when it's cheaper to repair them than it is to replace them. This only applies to covered disasters, and not to any repairs. For example, if your air conditioner breaks down, your home insurance policy generally won't cover it unless you also purchased a home warranty. But, if a tree falls on your air conditioner during a storm, your home insurance will likely cover the repair.

Full Replacement Cost

Full replacement cost is one of two options to replace your belongings. With this option, you can go to the store and buy brand-new items to replace what you lost.

This option is more expensive. But it gives you better peace of mind, because you don't need to worry about having enough savings to cover what your insurance doesn't pay.

Current Replacement Value

Current replacement value gives you what your item was worth at the time it was destroyed, rather than what it costs in the store today. For example, if you had a nine-year-old appliance with an expected lifespan of 10 years, the replacement value would be about 10 percent of the new price — as you used 90 percent of its life. You can either find a used item of the same value or buy new and cover the difference on your own.

Exactly how your insurance company calculates the current value of your items is spelled out in your policy. It may be based on the expected life or on what similar used items are currently selling for.

Expensive Items

Certain items — including electronics, jewelry, cash, and antiques — may have separate terms and coverage limits than your general property coverage. Read your home insurance policy carefully to see what coverage you have for these types of items.

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