Homeowners Insurance: Why Have A Home Inventory?

• Posted on December 10, 2014

A home inventory is a list of the contents of your home. It’s used mainly for insurance purposes but can be used for estate planning. When covered losses happen, it’s an easy and convenient way to provide your insurance agent with the contents of your home. It’s easier to inventory your home before a loss. Once the loss has happened it may be difficult to remember everything.

Your homeowners policy covers the structure of your home and provides a certain amount of money to replace your furnishings. Items that are expensive, like jewelry, paintings, collectables, or guns may need to be insured separately. You can talk to your insurance agent to find out if these items would be covered or if you will need a rider (insurance specifically for that item) to your policy.

Do you have to document every paper clip and toothbrush? Not at all. The purpose of insurance is to be able to replace items that would be difficult to replace without it. A toothbrush won’t break your budget but a new kitchen table might. Especially if that table is joined by a new couch, a new bed, and new clothing.

How do you inventory your possessions?

1. Focus on one room at a time. Open drawers and closet doors. Start at one end of the room and move to the other. Don’t bother with items that you have to replenish regularly. Focus on durable goods like furniture, clothing, and bedding. You may want to assign a dollar value to the items on your list. If you’re trying to decide what level of coverage you need, this helps you assign a total value to your estate.
2. Take lots of photos. As you walk through each room, take photos of expensive items, like electronics, art, designer clothing, or heirlooms. Turn them over and photograph the serial number, brand names, and labels. Print out the photos or burn them to a disc or thumb drive or upload them to a Dropbox account. Whatever your preferred storage method, include them with a copy of your written inventory. An article from Money suggests that before you attempt making a list of all your possessions, record a video. It’s fast and it can be helpful if a loss happens before you document everything.
3. Store a copy off site. Make a copy of your inventory for home and another for an off site location; a safe deposit box, an online dropbox, an attorney, or your personal files in your desk at work. If your house burns down an the only copy was in your dresser drawer, it’s useless
4. Keep receipts: When your purchase a high value item, keep the receipt with your home inventory. This will help back up a claim made to the insurance company. It doesn’t always mean you’ll be reimbursed for the full amount, but it may help you receive the maximum amount.
5. Update regularly: Once a year or when you purchase new items or sell something significant, update your inventory. Make a standing date with yourself. It doesn’t have to be pretty. Delete old items and insert the new. With technology it’s easier than ever. You may need to update your coverage limits also, if you add expensive items.

For Estate Planning: It’s good to have a will and a trust, but what about those little items that may not have a high dollar amount but have sentimental value. Your home inventory can be a way to assign items to particular people. Do you want your niece, Jenny, to have the Mickey Mouse watch you bought while you were at Disneyland together? Make a note of it in your inventory. A separate copy can be combined with your estate items.