How to Create a Home Inventory for Homeowners Insurance
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Every homeowners insurance policy covers the loss of personal belongings, whether those belongings are damaged, destroyed or stolen. If you own a house or a condo or rent an apartment, you can get coverage for your personal belongings.
When you get personal property coverage, it's a great idea to make a home inventory list. In short, "having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return and help you purchase the correct amount of insurance," according to the Insurance Information Institute.
Home Inventory + Home Insurance=Yes!
The personal property, or contents, portion of your homeowners insurance covers all your acquisitions, even if they are not physically in your domicile at the time of their being damaged, destroyed or stolen. So, what does this insurance product cover?
Carpets and rugs
Jewelry, furs, paintings and other big-ticket items
That's a lot of stuff to catalog! Read on for tips and suggestions on how to itemize your acquisitions and how this detailed, comprehensive stocktaking can help you in the long run.
When Will an Insurance Company Not Honor an Insurance Claim for Personal Belongings?
The personal property portion of your homeowners insurance only covers losses due to the risks, or perils, that your policy identifies. While home insurance policies cover the damages that result from many kinds of perils—fire, smoke, explosions, hail, windstorms, burglary and vandalism, to name a few—there are some kinds of property damage that cannot be the subject of a home insurance claim:
Damage from everyday wear-and-tear
Damage from negligence
Damage from intentional acts
Damage from an infestation
Damage from a flood, earthquake or landslide
So, if your 10-year-old electronic keyboard finally dies or, say, your wool socks are eaten by moth larvae, you'll have to replace those items on your own dime. But if your keyboard and wool socks are destroyed by a fire or nabbed by a thief, you can most definitely make a claim. As long as the future remains unknown, unforeseeable and full of risk, it's a smart move to compile an easy-reference home inventory list for insurance and legal purposes.
By the way, you can purchase separate, add-on insurance to cover disaster damage to your personal property from floods, earthquakes and landslides. This add-on insurance is also called a "rider" or an "endorsement." Flood, earthquake and landslide riders are each separate, stand-alone insurance products.
What Info Does an Insurance Company Want?
Now that we know what items are covered by a standard homeowners insurance policy, we can talk about what information your master list should include. A home inventory comprises two basic types of information about each article of your property: its cost (proof of value) and its distinguishing features (description of the item):
Proof of Value
Description of the Item
Brand, style and material
Make and model
A word-based summary
An image-based summary (photos, videos)
Yes, you've got to keep track of everything. Of course, one quick way to document your personal possessions is to just walk through your house snapping photos or shooting footage—it's a great way to get the ball rolling! An all-rights-reserved tip: Take the time to get a nice, clear image of every serial number. In short, the more information you have, the more useful your insurance carrier will find your archive to be.
How Do I Document All My Clothing?
The Insurance Information Institute (III) says you should count your articles of clothing by general category. For example, you home list might catalog "seven wool sweaters, four pairs of jeans and eight dresses." But the III also recommends taking note of special, perhaps valuable articles of clothing. So, you can itemize your "six pairs of Jimmy Choo shoes and two Vera Wang dresses," for instance. Of course, you're claim on these special objects will be all the stronger for having detailed descriptions, receipts and pictures.
What Is Actual Cash Value vs. Replacement Cost?
"Most homeowners insurance policies provide coverage for your belongings at about 50% to 70% of the insurance on your dwelling," according to the Insurance Information Institute. However, your insurance company can elect to pay the actual dollar value or the replacement cost of your personal belongings.
Actual Cash Value
The actual cash value reflects the depreciated value of your personal property at the time of loss. In other words, you won't be reimbursed for what you originally paid for an item but for the price you could get for that object now. If your carrier decides on the actual cash dollar value, you'll most likely be asked to sign an agreement before you receive any payment.
The replacement cost provides for the equivalent or commensurate replacement of a loss item. Besides very valuable objects covered by specialized, high-end policies, a settlement based on an item's replacement cost won't be issued until it has been replaced.
By providing all the necessary documentation and working with your insurance agent to tackle different questions, you can be sure your claims will have a better chance of success.
Take Stock of Your Big-Ticket Items
Standard homeowners protection will cover high-priced items only up to a fixed amount. For example, your jewelry may be insured only up to $2,000, no matter how much jewelry you have or how much you paid for it. In fact, most carriers in the insurance industry have reimbursement thresholds for computers, furs, watches, art, musical instruments, paintings, coins, precious and semi-precious stones, goldware, silverware, pewter objects and so on.
If your inventory list includes pricey possessions that exceed your policy's maximum payout, talk to your insurance coverage representative about purchasing a special personal property endorsement, sometimes called a "floater." This coverage offers significantly higher coverage limits, and it allows you to insure individual pieces as well as collection.
This special floater also applies to antiques, collectibles or irreplaceable objects. Your insurance representative will be able to answer any questions you have about having your pieces appraised, insured and inventoried. You should go piece by piece, asking if and how these items would be reimbursed in the event of a claim.
Tips on How To Create a Home Inventory
When you make a home inventory, most people use a combination of hand-written lists, photographs, video footage and online apps.
A home contents inventory worksheet is a great place to start if you want to make a visual and organized list of everything you own before you begin to digitally archive specific items. Filling in this worksheet has the added benefit of helping you to avoid missing items you might otherwise overlook, as well as assisting in breaking the archiving process into categories of items.
Organize Your List by Room
Pick one room and start there. If you start in your family room, you'll note your flat-screen TV, Game Boy console, leather couch, Lay-Z-Boy recliner, end tables, Persian rug, books and even your tchotchkes. You could get a folder for each room.
Organize Your List by Category
Some people like to have a separate folder for each item category: a folder for furniture, a folder for apparel items, a folder for electronic products, a folder for miscellaneous items and so on.
Start in a Small Area
Sometimes, the hardest part is just starting! So, start small, documenting the contents of a closet or the kitchen cabinet that holds your fancy appliances.
Start with Just Recent Purchases
When you create a home inventory, it can be a daunting task. If you're feeling overwhelmed, just start with your most recent purchases. Once you build up your mental archiving muscles, you'll be ready to tackle your older possessions.
Include the Basic Information
Here's an example of a typical description: "Lenox Federal Platinum five-piece place setting (one bread-and-butter plate, one dinner plate, one salad-dessert plate, one saucer and one teacup). Purchased for $103.99 at Bed, Bath & Beyond on Feb. 13, 2020." Of course, a copy of the receipt would be great—the more info, the better.
Photographs can capture an individual object, serial numbers and digital copies of receipts. A picture can provide a lot of information about an entire room or everything in just one dresser drawer. If you have a particularly valuable acquisition, you might want to photograph it from every angle. Make sure you label your photos for easy reference.
When you take a video, it's probably a good idea to take the room-by-room approach. What's more, you can add you own fact-filled commentary while you video. Whether you use a smartphone or a video camcorder, be sure not to skimp an any detail.
Using a Home Inventory App
A simple pencil and paper is fine, but today's cutting-edge technology can make creating a home contents inventory much easier. In fact, many insurance companies have their own inventory assistance tool within their app—for example, Allstate offers its own Digital Locker app. Using your insurance's app also offers the added advantage of your insurance provider already having a copy of your inventory on file in case you want to file a claim.
Most home inventory apps allow you to group belongings by category, scan barcodes, and upload and export photos. Here are some home inventory app options that are available at the Apple Store, the Microsoft Store and the Google Play App Store.
BluePlum Home Inventory
Encircle Home Inventory
Magic Home Inventory
Under My Roof
Make sure your information is backed up by the app developer in the case of the app getting deleted. Even if you use one of these apps, you should still retain, store and maintain a copy of your master list. Insurers need accurate data in order to process claims.
Don't Forget Off-Site Items
Your homeowners coverage protects your belongings in your backyard shed and your self-storage facility. Make sure not to forget these items when you make your archive.
Where Should I Store My Home Inventory?
Will your master list be safe if your house burned down or your computer crashed and burned? You can store your home inventory anywhere, but you should definitely give a copy of it to your insurance agent. Another great idea is to keep a copy in your safety deposit box. You could also store a copy at your office or, say, a trusted loved one's house.
If you choose to keep your master inventory list on a secure cloud file system, experts stress the importance of cyber security. For example, don't include your home address, phone number, credit cards or any other identifying information.
Remember, if you should be incapacitated due to an illness or injury, you inventory should be accessible to a trusted ally.
When Should I Create My Home Inventory?
The best time to create your home inventory list is the day after you purchase your homeowner insurance. If you wait to take an inventory until the day you want to file a property claim, your paper trail might be hard to follow if vital documentation has been thrown out, erased, damaged, misplaced or just plain lost.
When it comes to filing a property claim, the last thing you want to do is to scramble around at the last minute, trying to get together a comprehensive list of all your acquisitions and their substantiating documentation. Get a policy quote online and begin your inventory today!
Constantly Update Your Home Inventory
Your home inventory is only useful if it's accurate, so your list should be constantly updated. Make this updating process a habit, and add your latest significant purchases while the details are still fresh in your mind.