Home Cinema Insurance: Make Sure You Have the Right Coverage

A home cinema may sound like a luxurious concept you may only see in large estates, but it’s become more common and accessible. Anyone with a spare bedroom could convert it into their very own home theater. In most cases, all you need is a projector or large flat-screen TV, a surround sound system and some comfortable seating to transform an unused spare room into a cozy cinema.

The COVID-19 pandemic may be a catalyst for a sharp increase in home cinemas. After all, what better way is there to avoid catching the coronavirus than to screen the latest movies safely in your own home? As Steph Franklin, a UK-based interior designer with clients in the US confirmed, there is a sharp uptick in home cinema requests. According to Franklin, “Clients want to maximize how they use their homes. Nesting is back — and a home cinema/library is at the top of the list.”

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The Average Cost of a Home Cinema

As mentioned, you could convert a room into a basic home theater by adding a sofa or a couple of comfortable armchairs and a large television. But if you want to make your home cinema special, you may want to consider special seating, a projector or large-screen TV and a surround-sound audio system. 

According to Thumbtack.com, adding a home theater costs between $2,000 and $33,000. Some of the factors Thumbtack takes into consideration to come up with those figures include:

• The price of the home theater system (sound system, TV, wiring)
• Seating
• Lighting
• Professional installation

The figures from Thumbtack are only about average. Franklin has worked on projects well beyond the $33,000 price point. “The base configuration of Bang & Olufsen’s Beosound Shape Architectural Speakers start at $6,500 and can easily triple in price for a more elaborate system,” she says. And that’s only the speaker system.

Taking this into account, adding a home cinema to your home may require some adjustments to your homeowners insurance.

[Read: Homeowners Insurance Buyer’s Guide ]

Home Cinema Insurance

If you’re planning on upgrading your home with a home cinema, the added value needs coverage, otherwise, a fire or burglary could leave you uncovered for the money you invested in your home theater. There is no “home cinema insurance” coverage, but you can add the contents of the room to your existing homeowners policy.

Jade Plummer, who specializes in homeowners insurance in the San Clemente area of Southern California, explained that “when I get a request for home cinema insurance, I want to make sure to understand if it’s just for friends and family or if it’s used commercially. If used commercially, then it would be out of the home insurance realm and into the business insurance side of things.” 

If the home cinema is for personal use, “then the furniture and equipment would be included on the homeowners insurance portion that’s called ‘Personal Property,’” she says. Depending on the value of the contents, the additional costs could be added to the current homeowners policy. If the value is higher, an additional rider could be added, naming and insuring the expensive electronics and furnishings in the room. 

Plummer also recommends a rider called “Equipment Breakdown Coverage”. If TV or audio equipment is damaged or lost, the coverage will step in to replace them. Power surges are one of the main reasons behind electronics damage. And the most common cause for damaging power surges is cloud-to-ground lightning striking the earth. 

How To Insure Your Home Cinema

If you’re planning on adding a home cinema to your home or already have one, your first step is to contact your homeowners insurance company to let them know. They’ll add the additional equipment to your home coverage or determine if the value exceeds your coverage limits requiring a rider for additional coverage. Talk to your agent or representative about adding Equipment Breakdown Coverage for the equipment. The cost may be nominal but could save you serious money in case your TV or audio equipment fails.

Be sure to document your home theater expenses and save your receipts and invoices in a safe place. Jot down any serial numbers for equipment for reference. It wouldn’t hurt to photograph or video the room and the installed equipment — if you need to file a claim, it will be much easier if you can document what was lost or damaged.

Additionally, you may want to ask your insurer about the type of home insurance you have. If your homeowners insurance policy is cash value instead of replacement cost, you may have trouble replacing the contents. That’s because cash value coverage only pays you for the value of the items you’ve lost, with deductions for the age of the equipment. 

For example, in a cash value policy, the insurance company may depreciate the $10,000 television you purchased three years ago, paying you $4,000 to account for its age and value. You’d need to search for second-hand equipment or absorb the loss to buy a new television. In contrast, a replacement value policy pays for the cost of new equipment. The television that cost you $10,000 three years ago may now cost $11,000 — but your insurance company will cover the expense under replacement value coverage.

The Bottom Line

Adding a home cinema can provide you and your family with hours of entertainment. With no end in sight to the COVID-19 pandemic at this time, a home cinema can replace going to the movie theaters with screening the latest movies from the comfort and safety of your home. Depending on how much money you spend on creating your custom home theater, you’ll need to make adjustments to your homeowners insurance policy to protect your home theater equipment and furnishings. Be sure to speak with your home insurance agent about the home theater upgrade to your home to make sure you’re properly covered.

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