Nationwide has really been at it lately with their television advertising campaign. You might recall our recent post about the Nationwide Vanishing Deductible.
What Is “Brand New Belongings?”
According to the Nationwide commercial, if your personal belongings are stolen, damaged or destroyed, Nationwide will make sure you get brand new “stuff,” rather than just the depreciated value, assuming you have their optional Brand New Belongings coverage in place.
The meat and potatoes of this coverage can really come into play if you suffer a property loss (that’s covered by your policy).
The cost to replace everything you own with new items of “like kind and quality” (in Nationwide’s terms, “Brand New Belongings”) would be significantly higher than if your insurer only had to write you a check for the actual cash value of your home’s contents.
In other words, the 50-inch TV you bought three years ago for $1,000 may only be worth about $350 on Ebay today.
Brand New Belongings is essentially “replacement cost” coverage for your contents, meaning Nationwide will cover the cost to buy you a NEW 50-inch television set…in “today’s” money. If it costs $1,000, that’s what they’ll pay.
In the event of a claim, Nationwide will send you a check for the actual cash value of your insured item, then after you pay to replace or repair the item, they’ll reimburse you the difference (simply send the receipt to Nationwide for proof).
What If I Don’t Have Replacement Cost Coverage for My Belongings?
Multiply this difference between the cost to purchase your personal belongings at today’s “cost-new” by every single item in your home and you can quickly see that replacement cost coverage is the way to go.
In other words, would you rather receive a check from your insurer that allows you to go to a store and buy new property of “like kind and quality” to what you had, or would you like to get a check that covers you for the amount of money you would have made selling all of your personal belongings at a garage sale?
Should you panic? Probably not. Most homeowner’s insurance policies contain replacement cost coverage for your dwelling (the physical structure you live in) and your contents.
This is particularly true if you have a mortgage on your home. Your lender will DEMAND replacement cost coverage for your dwelling (because your lender actually owns it until the mortgage is paid-in-full) in order to satisfy loan requirements.
As a result, most insurers include replacement cost coverage for your contents as well.
Read more about the many types of homeowner’s insurance policies here.
When You Should Be Concerned
If you bought your homeowners insurance policy SOLELY based on premium cost, you might want to double check your policy to ensure you have replacement cost coverage for your home’s contents.
Why? Replacement cost coverage for your home’s contents is not GUARANTEED on your home policy. While it’s “normally” included, you might not have it if the only thing you looked at was price.
Some insurers offer the option to insure the contents of your home for actual cash value…and, of course, it’s cheaper! If you were looking for the “cheapest” home insurance policy out there and didn’t look at the details of your coverage, you might not have purchased replacement cost coverage for your contents.
Is This Coverage Special?
Nationwide is simply “highlighting” and adding spin (and a catchy name) to basic coverage most homeowners already have with whatever company they’re insured with.
“Basic,” meaning the type of coverage almost every other insurer (worth their salt) is already including on their policy coverage form without an associated commercial or cute name.
Insurance companies know most of us don’t read our policies or fully understand our coverage, so they take advantage of this by scaring us into questioning what we actually have.
If Nationwide’s policy saves you money…go or it. Just be sure to read and understand your current policy before you rush off to obtain “Brand New Belongings” coverage at a higher premium if you already have it on your existing policy.
For the record, Nationwide used to refer to Brand New Belongings as “Extended Replacement Cost.” Doesn’t sound nearly as cool or exclusive, does it?
Read more: Why is my home’s replacement cost so high?