What Is Personal Effects Coverage? Do You Need It?
Last Updated on January 13, 2022
When shopping for auto insurance, you may consider adding personal effects coverage.
Personal effects coverage covers certain items in your vehicle. It could cover your purse, laptop, wallet, and other items left in your vehicle, for example.
What is personal effects coverage? How does it work? Should you add personal effects coverage to your policy? Keep reading to discover everything you need to know about personal effects coverage.
Table of Contents:
- What Is Personal Effects Coverage?
- What Is a Personal Effect?
- Personal Effects Coverage and Rental Cars
- What Does Personal Effects Coverage Cover?
- What Does Personal Effects Coverage Not Cover?
- Do I Need Personal Effects Coverage?
- How Rental Car Personal Effects Coverage (PEC) Works
- Normal Rental Car Insurance Does Not Cover Stolen Possessions
What Is Personal Effects Coverage?
Personal effects coverage is a type of insurance product that covers portable possessions you own.
If you have home insurance, then your home insurance covers items in your home – like your couch and TV. It also covers items you carry with you regularly – like your cell phone, laptop, and other personal effects.
Similarly, if you have renters insurance, then that renters insurance covers certain possessions you own.
Additionally, some rental car companies offer personal effects coverage (PEC) as an optional add-on. You buy personal effects coverage for $2 to $10 extra per day, and the rental car company compensates you for any lost or damaged possessions.
What Is a Personal Effect?
When an item can be carried around, it’s considered a personal effect.
Home insurance covers your personal effects wherever they go, up to a certain limit. If someone steals your laptop while you’re sitting at a Starbucks, for example, then you could make a claim through your home insurance personal effects coverage. Or, if someone breaks into your car and steals your purse, then you could make a claim.
The portability of an item makes it a personal effect. A piano or couch from your home is not considered a personal effect, for example, but your backpack and laptop are.
Personal Effects Coverage and Rental Cars
In most cases, you have personal effects coverage through your homeowners insurance or renters insurance. However, some rental car companies offer personal effects coverage (PEC).
In exchange for $2 to $10 per day, the rental car company covers certain personal possessions in your vehicle, up to a limit.
Personal effects coverage is optional when renting a vehicle. If you already have home insurance or renters insurance, then it may be unnecessary.
What Does Personal Effects Coverage Cover?
Personal effects coverage covers damage and theft of certain personal items.
Items covered by personal effects coverage include:
- Any items you normally carry with you during an average day
- Purses, wallets, and backpacks
- Laptops, cell phones, and other personal electronics
- Luggage and suitcases
- Other items you brought with you traveling or are carrying inside the rental car
What Does Personal Effects Coverage Not Cover?
Your insurer has certain exclusions for personal effects coverage. Depending on your insurer, your personal effects coverage could exclude the following items:
- Perishable items
- Medical supplies, including contact lenses, artificial limbs, and false teeth
- High-end electronics
- Guns and ammunition
- Household furniture
- Equipment attached to your automobile (like stereo equipment, built-in GPS systems, radar detectors, and CB Radios)
Check your personal effects coverage to ensure you know what’s covered and what is not covered. Many people are surprised by exclusions and are left without coverage until it’s too late.
Auto insurance could cover some of these items. Personal effects coverage does not coverage stereos and other vehicle attachments, for example, but you can add this coverage to your auto insurance policy for a few extra dollars per month.
Do I Need Personal Effects Coverage?
Generally, it’s a good idea to have personal effects coverage. If you lose something, or if something is stolen from you, then you can be compensated for that loss.
If you have homeowners or renters insurance, however, then you should already have personal effects coverage:
- If you own a home and have homeowners insurance, then you have personal effects coverage through your home insurance policy. Check your policy documentation to verify coverage.
- If you rent a home and have renters insurance, then you have personal effects coverage through your renters insurance policy. Most renters insurance policies cover personal possessions up to a certain limit.
If you do not have renters or homeowners insurance, then you may want to buy personal effects coverage through a rental car company or other third-party provider. Without personal effects coverage, you cannot make a claim if your possessions are lost or stolen.
How Rental Car Personal Effects Coverage (PEC) Works
Many rental car companies offer personal effects coverage. The rental car company may give you the option of purchasing this coverage at the rental desk.
Typically, rental car personal effects coverage covers the loss or theft of personal belongings for the principal driver, additionally named drivers, and any members of your immediate family.
In exchange for a flat fee per day, the rental car company absorbs the risk of covering your personal effects. Prices vary between rental car agencies.
There’s a limit to this coverage. Most personal effects coverage policies cover around $600 to $1,000 of losses per person, or around $2,000 to $3,000 maximum.
In other words, if someone steals your $2,000 laptop from your rental car, then you might only receive $1,000 in compensation from the rental car’s insurance company.
Normal Rental Car Insurance Does Not Cover Stolen Possessions
When you rent a car, you’re protected by several layers of insurance. Your ordinary car insurance policy typically extends to rental cars. Additionally, the rental car company has its own insurance on the vehicle. Some drivers also purchase the collision damage waiver (CDW) coverage for added protection.
None of these types of insurance, however, will cover personal effects within the rental car.
If someone breaks into your car and steals your phone, for example, then you will not receive compensation for that phone through any standard insurance coverage. You can make a claim for a broken windshield, but you cannot make a claim for the stolen possession (unless you already have renters or homeowners insurance with personal effects coverage).
If you want to protect your personal belongings when renting a vehicle, then consider adding personal effects coverage to your policy.
Final Word on Personal Effects Coverage
Many rental car companies offer personal effects coverage (PEC). Personal effects coverage covers theft of your phone, laptop, and other portable items up to a certain limit.
If you already have renters or homeowners insurance, then personal effects coverage may be unnecessary. Most renters and homeowners insurance policies cover personal possessions.
However, if you want added protection, or if you don’t have renters or homeowners insurance, then you may want to buy personal effects coverage from your rental car agency.