Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Content Writer & Entrepreneur Shuman Roy

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 28, 2022

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Nationwide has really been at it lately with their television advertising campaign. You might recall our recent post about the Nationwide Vanishing Deductible. We like digging into companies for informational purposes.

The most recent spot highlights ‘brand new belongings’ coverage on their homeowner, condo, and renters insurance policies. Let it be said that they are an insurance company that understands the need to shake things up now and then. Customers tend to look at new policies with much more interest and curiosity than older options.

What do they mean by ‘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 of anything that suffered damage, assuming you have their optional brand new belongings coverage in place.

The meat and potatoes of this additional coverage that you have the ability to purchase can really come into play if you suffer a property loss (that’s covered by your policy).

The average cost to replace everything you own with new items of ‘like kind and quality’ (in Nationwide’s terms, this would mean the 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.

If you have actual cash value loss settlement coverage for your home’s contents, you’ll simply receive a check for the depreciated value of your belongings in the event of a loss.

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). As far as optional features are concerned, this doesn’t seem all that bad. The policy language is pretty straight forward, and doesn’t seem to be implying that it’s something that would end up breaking your bank.

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What if I don’t have replacement cost coverage for my belongings?

Multiply the difference between the cost to purchase your personal belongings at today’s current cost 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? This is why it’s important to carefully consider all of your insurance coverage options.

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. Which means you don’t have to worry about a sudden influx of expenses if your home suffers water damage.

Read more about the many types of homeowner’s insurance policies here.

When should you 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.

By basic, we mean 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. Because insurance products are always changing, this isn’t a huge surprise, but it still does make us wonder what else they’re going to spin in a new light.

If Nationwide’s policy saves you money…go for 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 personal property protection 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? For these reasons, it’s always best to review homeowners policies, to get a better understanding of the types of coverage that comes included or is being paid for.

Read more: Why is my home’s replacement cost so high?