Home owner's insurance question

Reading through my policy it would appear that through the personal property section an audio system is covered for loss.  No special rider is necessary.  But the replacement cost section states that the insurance company won't pay until you actually replace your stereo system.  If one makes a big claim, let's say $100,000, how does one pay this first if you're going to get paid afterwards?  What if you don't have the money to re-buy your system or you choose not to replace it?  Can any insurance experts explain to me how these home owner policies actually work?
I once suffered a major loss, and the insurance company actually purchased the equipment for me. Some of it was shipped to my house, other items I picked up at the dealer.
Ex claims guy here. you are typically covered for replacement cost - insurance carriers will work with vendors to buy the equipment for you. They will get a better price than you and I. If you don't replace you will get actual cash value vs. replacement cost. 
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the way it works with most insurers is they will pay up front the depreciated cost of your gear and then pay the remainder of the "replacement cost" when you show proof of purchase....some carriers just pay the whole thing up front. I would discuss this issue with my insurance agent, he should know
My insurance agent said they would cover for loss of my system in case of a major loss, but said it would be a good idea to take detailed pics of all my equipment including Cd's and Lp's. The latter could be more expensive than the equipment if you think about it. Documentation is extremely important in cases like this. Obviously you would want to keep this documentation in a safe, indestructible, place.
they will pay up front the depreciated cost of your gear and then pay the remainder of the "replacement cost" when you show proof of purchase....some carriers just pay the whole thing up front.

Can you have replacement cost reimbursement on your audio system only? IOW, can you single out the system from the  value of other property?

But the replacement cost section states that the insurance company won't pay until you actually replace your stereo system. If one makes a big claim, let's say $100,000, how does one pay this first if you're going to get paid afterwards?  

Yeah. If only we had some way of providing money now and paying it back later. Like, a credit. Of course having the money now is worth more than having it later, so you would probably have to pay back a little more than the credit. Lotta complicated details to be worked out. Probably never happen. Not in a million years.
As an ex insurance guy, @@dweller and @tuberist are correct. You get the actual cash value of each irem first and then the remaining $ after you actually replace the irem. The policy covers full replacement cost only if you replace. You can replace with a similar item, it does not have to be the same manufacturer or model.
Also, keep in mind that personal property is covered for specific named perils, unlike the dwelling which is covered for "all risks". A rider can be purchased to cover PP for all risks.
... personal property is covered for specific named perils, unlike the dwelling which is covered for "all risks" ...
It’s uncommon for a homeowner’s policy to cover all risks. For example, you need separate flood insurance if you want that protection. Many policies exclude earthquake coverage - that requires an additional premium. It’s always best to read your policy - although few do - and consult with your agent.

"Civil insurrection" is another common exclusion.
@cleeds Yes, of course there are some exclusions. I was just trying to keep it basic. After all, this is an audio forum.
... Yes, of course there are some exclusions.
That's not what you wrote:
unlike the dwelling which is covered for "all risks"
What if you bought a used piece? Say I got a pair of speakers for $5,000 that were originally $15,000. Would the insurance company have to get me the same, or equivalent up to $15,000?
My father told me, "Your insurance policy is only as good as your insurance agent." 

You've received a lot of good advice from experienced people here but my experience has been that, regardless of what the fine print in your policy says, if you have an agent who's willing to help you take every advantage of what's available you'll come out ahead, sometimes way ahead. 

I've had only three major claims in my life. In those cases my close, face to face relationship with my agent got me considerably more compensation than I likely would have without that personal relationship. My policies may have been priced a little higher than the cheapest I could have bought but they turned out to have been real bargains.
@cleeds As I wrote, every insurance policy has exclusions, auto, property, life, personal article floaters, boat, etc. etc. "All risk" is a term that is used to differentiate from a named peril policy.

@koestner If the speaker is no longer in production, its replacement cost would be the current market price or actual cash value.

If the speaker is still in production and has a replacement cost of $15,000, the policy would cover the cost of replacement. However, the insurance company has the option of replacing it themselves at their cost. Sometimes they can acquire the item for less than retail. If you choose to buy a more expensive speaker, you can only collect up to the RC value of your claimed speaker. Keep in mind, I am referencing the most common Homeowners Policy known in most states as a HO-3 policy. Best to check with your company or agent.
Is it true most insurances will cover a "Zombie apocalypse?"...:-)
I have been thinking about the same insurance question since i have revamped both of my systems and continue to add to them. Question is, i have renters insurance only and was told my the issuer that it is capped at 5,000, is there no recourse such as adding or just hunting out an insurer that will increase the coverage? 
Thanks for the many excellent replies.  My policy states: "You may elect to disregard the Replacement Cost provision in making a claim, but your election shall not prejudice your right to make further claim within 180 days after the loss for any additional liability brought about by this policy condition."  Is this the legal jargon saying what @dweller and @tuberist state?  In other words you get paid the depreciated value and then the replacement value only if you re-buy?
I think these are great questions to clarify with your agent. They should know or be able to find out details regarding your specific situation and answer your concerns.

I agree with one of the other posters stating the quality of your rep is an important/critical link in the service chain. I’ve been with the same carrier over 35 years, but did have to request a change in reps one time 15 years ago. Otherwise, smooth sailing.


Get an agent and get 3 quotes. Insure yourself adequately! I’ve move from owning back to renting. I still have $75000 personal property coverage, which in the case of a fire (or collapse of ceiling from an earthquake) it still will leave me 10’s of thousands short—the question being do I need those $10,000 of ties replaced!?! Every policy is different and essentially if you spend the money on something else within your home...as the insurance guy above said, know what you are buying First. Personally, I’d make sure I would get paid up front. Most audio mfg’s At least ethical ones, are going to force an insurance company to purchase through a dealer. Either you sell through dealers or you don’t. And scan every invoice and keep a copy of all in the cloud and on a disk or SSD drive separate.
The overriding thought about insurance is to put you back as you were before the loss, nothing less or nothing more. While your home (the structure, otherwise thought of as anything you’d leave behind if you moved), is covered as all risk.  Let’s leave the specifically excluded perils behind for now. Conversely, your personal property (your contents, the things you take with you when you move), is covered by named perils only. Because insurance is designed to put you back as you were, they’ll often pay you a value equal the current value of your property at the time of the loss, but will pay you UP TO the replacement cost if/when you replace it. This answers the question about paying $5K for speakers valued at $15K. In theory, neither number matters. Insurance will pay you the actual cash value at the time of the loss, and if you have replacement cost, they’ll pay you the reasonable cost to replace the damaged speakers. This doesn’t even touch a discussion about specific limits within your policy and the thought that your music could be considered a collection or collectible. 
mr_m1,009 posts
02-07-2019 3:01pm
Is it true most insurances will cover a "Zombie apocalypse?"...:-)

Only if you use the right Ammo.


This has been an incredibly valuable discussion. Makes me think, do I truly have the most monetarily valuable asset in my home truly protected. While I may have some level of protection, has that protection been truly verified and documented?  Have I done a good enough job of cataloging that equipment and accessories?  Have I created a complete recorded trail of the costs of such equipment and accessories? Am I up to date with my insurance rep on how my policy actually works?  My equipment and music collection is by far the most valuable asset in my home (outside of those living and breathing beings).  I now second guess my level of protection and will definitely start working together tightening this up.  Thank you for an important post and getting me to think about this more.
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Glad to see other insurance professionals here. All very good advice. I’ll just add a few things.

1. LP’s if considered “collectible LP’s (an intrinsic value that appreciates) can be insured separately under a Personal Articles Floater, as can be jewelry, other collectibles, camera, artwork and more. This type of policy is “all-risk” vs named peril; even dropping a LP would be covered.
2. A cash settlement will include depreciation but replacing the item ( if you have replacement cost coverage on your personal property, most people do) you will get you full retail value.
3. AV gear does not normally appreciate in value so it typically cannot be insured for all-risk coverage.
4. The value of an educated insurance agent with a qualified staff cannot be said enough. Dealing with unlicensed people in a call center, well “ you get what you pay for”! That statement also applies to auto insurance. My agency insures people weekly with the wrong type of insurance.


@mrdron If by "capped" you mean your overall policy limit, that doesn't sound right. You get to choose the policy limit because you know what you own and you are paying the premium. If your insurer won't increase your limits at your request move on. Kudos on having Renters Insurance, many renters don't bother getting it.

@philharmonicpete    Yes, it is legal jargon saying you have 180 days after the ACV payment to collect the rest up to the actual amount spent to replace the item. In some situations, insurers will grant an extension if  requested. 

@ricmci  There is no limit on audio equipment other than the policy limit. However, there may be a dollar limit on "Media". You will have to check your policy under the heading "Limits on Certain Property" or "Property We Do Not Cover" or contact your insurance company.

Finally, Insurance companies are highly regulated by the individual states and coverage/limitations, etc. can vary from state to state.    
Elizabeth is spot on with the under-insured issue. Also the insurance companies like to be aware of any MATERIAL" issue that exists - and £100k of hi fi stuff is indeed material.  A wise assessor can decimate your claim if they feel inclined. I declare my values (over £100k) and list them as far as I can (apart from the fact the list changes regularly)
This all sounds like a potential nightmare.  Let me set up a possible scenario.  You have a home owners's policy with a $200,000 limit of liability with replacement coverage for personal property.  Your home has a fire and you have a total loss of your $150,000 stereo system.  You make a claim with your insurance company for that $150,000.  You do not have any money to re-buy your system.  What are you going to get paid by the insurance company?  Are they going to replace your system even though you have no money to do that yourself?
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Elizabeth is correct in all aspects with one respectful correction. And by the Elizabeth you could teach me volumes on AV...

Contents Coverage B or personal property,  
does not have a “co-insurance penalty” clause as does Building coverage A does. While you are required depending on the carrier to carry 80-100% of replacement cost on your home, your contents has no % that is required. You could have $50k contents but only carry $25k contents and still get full recovery on a $25k loss. The exception is the federal government with National flood insurance, carry 100% across the board or FEMA might get you!
38 year SF agency owner
@dave1980 Correct, there is no co-insurance requirement on personal property. I was going to mention that earlier, but we seem to be getting in the weeds here.

@Tatyana69   Rubbish, a adjuster cannot "decimate" your claim. That is called bad faith and is illegal. The key is to have documentation to support your claim, photos, receipts, etc.

@philharmonicpete  In your scenario, you would prepare an inventory of your major items, stereo and otherwise.

Lets say you had an amplifier with a replacement cost of $20,000 and the actual cash value (used value) is $15,000. The insurance company would pay you the $15,000 and as soon as you submit documentation that you have ordered the replacement, you would get the additional $5,000. You could replace it with a more expensive amplifier, but can only collect up to $5000. Also, in most states insurance also pays the sales tax.

Sure it's a PIA, but having a total loss fire by definition is a PIA, a bigger PIA without insurance. 
@ericsch  thanks so much for your answers.
Would photographs of your system be sufficient proof for an insurance company to support a claim for loss?
Lowrider, it might be possible to have an endorsement or "rider"on your policy with a separate schedule and itemized values but I've only seen this done for jewelry, art work etc. Interesting question.
Tuberist is 100% correct. Items that appreciate in value ( jewelry artwork etc) over time can be individually scheduled with a declared value and receive “all-risk” coverage, even dropping an item would be covered.

items that depreciate over time cannot be insured for a declared value. However here is some good news. Say your “top of the line” Sony 75” TV or former top of the line Matantz pre-pro is destroyed by lightening from years ago. If that model is no longer being sold, a quality carrier will replace it with the “top of the line” model today. Keep all brochures, sales receipts, owners manuals and take video or pictures to prove the model you had. Do not throw it away in case the adjuster wants to see it. I have had 10 year old gear replaced at over 2.5 times what I originally paid.
Jumping back in here. Policy limits will certainly play a role, as will the cause of loss (peril). If you have a renters policy your limit may be too low for a high end system. Raise the limit if this is the case. If you own, typically your contents coverage will be a percentage of your house value - Hopefully house value will be high enough so say 50% contents coverage will cover the equipment. Check your limits. Boxes are good, but receipts are better and photos are a must if equipment is highly valued. The key in any claim is to help the adjuster value your loss and close it out. They have a pending and love to close claims. Make it easy for them by providing appropriate documentation. If you are with a major carrier I think the adjuster is more important than the agent ( who has little to do with the claim).  
As an independent insurance agent/broker for over 41 years, here's some good info. 
1)  Get an insurance person/agency that wants to know you and will know what you need.  We are stupid nosy for that reason.  If you buy online , the companies know you don't what you're doing and looking at price only.  So when you have a loss and it's not covered ...You can't blame the company because YOU picked out your coverage !  Buyer beware. 
2)  Know what your contents is worth !!!  Take good pictures of your stuff !!!  AND store the pictures /info offsite or in the cloud . 
3)  It's a pain in the butt, but make a spreadsheet of your vinyl and CD's and DVD's .  If you have collector vinyl you can schedule them for additional premium ( and no deductible ). Note: They are only covered for breakage in most instances only if you add breakage coverage.  Store this info offsite or in the cloud also. 
4)  Get real ...There is no such thing as " all risk" insurance any longer !  Buy the broadest form property coverage you can get.  If you live where it floods , buy flood coverage and excess flood insurance ( because Federal flood only covers $ 100,000 max on your contents ! ) .  Earthquakes ? Buy or add earthquake insurance.  If your policy doesn't say " Replacement Cost Contents or Replacement Cost Personal Property"  you're buying "named perils"  aka junk insurance IMO !   Know what you're buying and don't wait for a loss to find out what you don't have. 
5) I noticed no one mentioned covering your equipment tweaks and your home-built DIY items .  Make sure you have a list / schedule of what you have added/changed and take pics !  From ICs, to fuses, to cartridges, tonearms, re-caps, factory upgrades, etc .   No proof , no compensation in the event of a loss. 
6) The insurance carrier is not your friend, the insurance adjuster is not your friend, your insurance agent/broker SHOULD be your friend or at least greatly familiar with your insurance exposures and needs.  We can and do go back to the carrier or adjuster to help assist you on a loss if there is a problem . And we can assist you through the entire loss to make sure you get what you have paid for.  Insurance is a contract between you and the coverage provider . A great agent/broker should be there from purchase to and through claim period. 

Now go look at your policy and call your agent/broker and find out what the heck you have and what you're paying for.  

NOW...Back to our music .... Happy Listening !