If you ever experience a total or partial loss of your home and have homeowners' insurance, you can file a claim for your losses. When it comes to your personal belongings, you might wonder how the insurance company will handle the compensation they offer for the claim. The way they handle it depends on several factors, including your insurance policy coverage and the things you own. Here are several things to know about how this works with a home insurance claim.

It Depends on Your Valuation Type

The first thing to know is that insurance companies use different types of valuation methods to calculate losses for home insurance claims. The main two types are actual cash value and replacement cost. If your policy offers actual cash value for the valuation method, they will compensate you for the actual value of your items. For example, if you bought a TV five years ago for $1,000, it might only be worth $200 today. If this is the case, they would give you $200 for that TV if you encountered a covered peril that damaged it.

The other method is replacement cost. With this method, your insurance agency compensates you for the amount of money it costs to replace the items you lost. If the TV you lost now costs $1,200 to purchase, they would give you $1,200 for it.

You Need Proof of Your Losses

To receive compensation for your losses, you must prove that you had the items you claim you lost. One of the best steps you can take before experiencing a peril is taking an inventory. You can write down everything you have or video your home to capture all your items.

You Must Have the Right Coverage on Your Personal Property

The last thing to know is that you must have enough coverage for your personal property to receive enough compensation. You might also need to have riders on costly items you own if you want the insurance company to fully compensate you for all your losses. Your insurance agent can assist you with choosing a policy that covers everything you own.

When you purchase a homeowners' insurance policy, talk to the agent about your coverage needs. Your agent can help you choose an amount that is high enough and add the extra coverage types you need. You can learn more by talking to a home insurance agent of your choice.