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A homeowners insurance policy can make it easier to recover from the loss of valuables in a covered event, such as a home burglary or natural disaster. But without a thorough list of the missing items and their worth, it may be difficult to get reimbursed for their full value. Having a home inventory prepared in advance can make your life much easier if you ever have to file an insurance claim.
Why Do You Need a Home Inventory?
When you file a home insurance claim for personal property, the insurance company will want "proof of loss"—documentation of your ownership and the item's value. A home inventory helps ensure you're fully compensated for your property.
In the wake of a catastrophe, you may need a home inventory to prove eligibility for tax deductions or disaster assistance. Having a detailed accounting on hand saves you the headaches of listing all your possessions from memory.
Finally, a home inventory can help to ensure your homeowners insurance includes adequate personal property coverage. As you catalog your possessions, you'll likely be surprised at how much it would cost to replace everything in your home—and you may realize you're underinsured.
How to Do a Home Inventory
Anything in your house that's not "permanently installed" is considered personal property. For example, wall-mounted light fixtures are not personal property, but table lamps are. If your homeowners insurance covers belongings in a storage facility or in a garage, shed or other outbuilding on your property, inventory those too.
To make the home inventory process more manageable, break it into smaller steps by starting with your most expensive property, such as furniture and electronics, or going room by room. Walking through each room and taking video or photos of its contents is a convenient method that lets you zoom in on model or serial numbers. While recording, describe each item in detail, including manufacturer, model, when you bought it and the price you paid for it. Be sure you're providing the correct information—exaggerating or lying about an item's value is considered insurance fraud.
Gather receipts, contracts or other purchase records that document the value of your belongings. Claims adjusters won't expect receipts for everything you own, but having them always helps. In lieu of a receipt for a recent purchase, the listing for the item online may suffice, or you can provide bank or credit card statements that include the purchase. For things you didn't pay for, such as gifts or items inherited from a relative, do your own research to estimate the replacement cost.
A standard home insurance policy may not cover the full value of certain items, such as electronics, jewelry, furs or collectibles; you'll need to buy additional coverage to ensure these items are protected.
What about when you have dozens of similar items, like clothing, dishware or books? Thankfully, you don't need to catalog every pair of socks. Instead, you should count the number of items in each general category, calling out any that are especially valuable (for example: 35 hardcover books and one first edition of Dickens' "Dombey and Son").
Your insurance company may have apps, checklists or worksheets you can use to conduct your home inventory. If not, an online search will uncover several tools to choose from, such as Nest Egg for iOS or HouseBook for Android. It's generally simpler to create a digital home inventory than a written one. A digital inventory is easier to store, update, keep safe and send to your insurance company for a claim.
What to Do With Your Home Inventory
Keep copies of your home inventory, including photos, videos, receipts and other documentation, in several places. For example, you might keep a copy of your written inventory in a fireproof safe at home, one in a safe deposit box and one at a friend's house. Preserve digital copies of your inventory in the cloud and email one to yourself. Having a copy inventory stored somewhere outside your home means that if your belongings are stolen or destroyed, your list will be out of harm's way.
When you file an insurance claim for personal property, you'll use your home inventory to confirm the value of the lost items. Some home insurance policies pay "actual cash value"—that is, the price the item currently sells for today—which means you may not receive enough for older items to replace them with comparable new ones. A "replacement cost" policy pays to replace your belongings with equivalent new ones. However, you'll typically receive actual cash value first and be reimbursed for the replacement cost only after you're replaced the items and submitted receipts to the insurer.
Protect Your Property With a Home Inventory
Be sure to update your home inventory regularly. You can do this annually when you review your homeowners insurance coverage, once a month, or whenever you make a major purchase—whichever schedule you're most likely to stick to.
Creating a thorough home inventory takes some effort, but if you ever have a major home insurance claim, you'll be thankful you took the time to catalog your home's contents.