What happens when you need additional contents insurance?

“I [didn’t] need some actuary looking at a $2,500 Comme des Garçons dress and saying, ‘This is only worth $50,’” Clarke says. She was searching for a policy that would not account for depreciation in the value of her dresses—this was not an ordinary wardrobe, after all. 

Actual cash value vs replacement cost

After speaking with an insurance broker, Clarke was presented with various insurance policies whose contents coverage offered actual cash value. This meant any claim payments would be based on the market value of the dresses at the time they were damaged or lost—depreciation included. Instead, Clarke wanted her collection insured for the amount required to restore the garments to their original condition or to buy them new—she needed a replacement cost policy. 

Clarke approached her original insurance provider, which informed her she was already on a replacement cost plan. Her base insurance policy contained $175,000 worth of contents coverage, and none of her dresses surpassed the per-item coverage limit. This meant she could rest easy knowing her collection was adequately insured. 

In order to be covered, though, Clarke had to create a detailed record of all of her belongings, which in itself was a very big task. “One of the biggest challenges was just documenting everything,” she says. “I wish I had started that process earlier so it wasn’t so much of a massive job.”

What’s covered and not covered under contents insurance

When you buy a home or rent an apartment, you can purchase an insurance policy package that includes coverage of your contents. However, many insurance providers set coverage limits for certain special items, such as jewellery, artwork, instruments and other collectibles. These special limits don’t typically apply to clothing—not even the kind that Clarke needed to insure. 

Coverage limits vary among insurance companies and policies—some may cover up to $5,000 for certain items, others $10,000, while limits for high-net-worth clients may go up to $100,000, according to insurance experts interviewed for this story. These are all subject to deductibles stated in the policies.

If the value of a special item exceeds a base policy’s coverage limit, you can purchase extra coverage for an additional premium. This is referred to as scheduling or listing an item. “It’s like an insurance policy within your insurance policy for that one item,” says Anne Marie Thomas, the Insurance Bureau of Canada’s director of consumer and industry relations.

How to insure items above a policy’s limits

If you want to insure an item that’s worth more than your base policy’s limit—like an engagement ring or a Birkin handbag worth hundreds of thousands of dollars, for example—you can speak to your insurance professional about separately scheduling or listing that item. 

“I didn’t have to do anything special for my pieces,” Clarke says. She didn’t need to schedule any items on her policy since none individually cost more than $5,000 or $6,000. “All I did really was go through and take stock of what I have.” 

While requirements differ between insurance providers, many will request a receipt or an appraisal to schedule an item. Your provider will then charge you an additional premium, and a description of the item and its appraised value will be written into your policy.

“The benefit to this is you don’t pay a deductible,” says Greg Kruk, partner at Sentinel Risk Insurance Group and a director on the board of the Insurance Brokers Association of Ontario.

“Usually an appraisal is good for five or six years, and then [the provider] might ask you to update the appraisal,” he says. “Some companies don’t.” Providers that specialize in insuring high-net-worth individuals “typically won’t ask for an appraisal unless an item is worth over $100,000.”

The cost of insuring a scheduled item

If you want your contents covered under a tenant insurance policy, you can expect the cost to start at around $20 to $25 per month, according to Kruk. That price will cover about $40,000 of personal property and liability, though Kruk says the monthly cost will go up if you want to increase your coverage or schedule an item.

For home owners, it’s a different story. The price of home insurance varies widely since the premium is based on a multitude of factors, including the home’s location, its size and contents, its age and condition, as well as the individual’s personal claims history. However, like with tenant insurance, scheduling an item means paying a little more. 

There’s a rule of thumb, too, when it comes to that additional cost. Thomas says scheduling an item under a home insurance policy typically costs $1.50 to $2 per $100 of additional insurance—or 1.5% to 2% of the scheduled item’s value. In order to make sure you’re getting the proper coverage on a scheduled item, Thomas says you must get it appraised.

“If it comes time that they have to make a claim, they’re not running around trying to prove that they a) had the item and b) what it’s worth,” she says. “The insurance company knows up front.”

If something happens to an item that’s been scheduled, you should call your broker, submit a claim and expect to be reimbursed for the appraised value of the item. “There really should be no issues,” Kruk says. 

However, if you’ve forgotten to schedule a special item that is valued above the limit on your base insurance policy, you will only be covered up to the base limit, minus the deductible. Most companies will still ask clients to show a receipt or an appraisal. If you don’t have a receipt, you can show pictures or other proof that you owned the item, Thomas says.

Final thoughts

When searching for insurance, speak with a broker who can help you find the policy that best suits your needs, Kruk suggests. Thomas adds that you should make yourself aware of the limits on your policy and always read the fine print.

Clarke, for example, says her experience taught her to look into and understand the difference between replacement cost policies and actual cash value policies. “The more that your insurance professional knows about your situation,” Thomas says, “the more likely you are to be better protected.”

More on home insurance:

• Is my house covered if I’m not living there? Vacant home insurance, explained

• Why your home insurance rates are rising

• Watch: What is tenant insurance?

• How to tell if your home insurance settlement is fair