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Simple Steps to Making a Home Inventory

By Maricelle Ruiz-Calderon on May 18th, 2010
Homeowners Insurance

Windstorms strike Tennessee. Fires rage through California. Thieves ransack a home in a nearby neighborhood. Nobody expects to make a home insurance claim, but disasters happen. When they do, you're much better off if you have a home inventory.

A home inventory--a detailed list of your personal possessions, including estimated value and purchase date--allows you to keep track of what you own and to buy home contents insurance at the right price. The home inventory is useful for anyone with homeowners insurance, mobile home insurance or renters insurance.

Why a Home Inventory?

Jeanne Salvatore, senior vice president at the Insurance Information Institute (III), emphasized the importance of creating a home inventory prior to a disaster rather than relying on memory.

"Most people cannot remember what they had for lunch yesterday," says Salvatore.

There are three compelling reasons why you should draft a home inventory:

  • It's easier for you to file an insurance claim. In the event of a disaster, the home inventory could speed up the processing of your insurance claim.
  • You will buy the right amount of home contents insurance. Salvatore says that your inventory will ensure that you purchase coverage for expensive items.
  • You can quickly verify if you qualify for a tax break due to an insurance loss. If you have what Salvatore describes as "a sizeable, unreimbursed insurance loss," you may earn a tax break.

Steps to Creating a Home Inventory

Developing a home inventory doesn't have to be an onerous task. You can choose to create one on paper, with a video recorder or online--or some combination of the three.

"What matters is that you get the job done," says Salvatore.

Here are the III's recommended steps to a home inventory:

  1. Make a list of belongings for each room in your house. "Go room by room, making a list of everything you have," Salvatore says, recording the place of purchase and make and model when appropriate. List all items of clothing you own by category (pants, coats, shoes, and so on). Record the serial numbers of major appliances and electronic equipment. Save paperwork such as purchase contracts, receipts and appraisals.
  2. Document your home and your home's belongings with a video camera and/or photographs. For instance, you might video record valuable garments in your closet individually, describing important details and the place of purchase, says Salvatore.
  3. Organize this information on or offline. If you write or record your home inventory instead of creating it online, place the document, receipts and recordings in a safe deposit box or at an alternate location.
  4. Update the home inventory when there are significant changes. Salvatore advises homeowners and renters to change the home inventory "every time you make major renovations requiring major purchases."
  5. Notify your insurance agent to ensure coverage of high-value items. Check with your insurance company every time you purchase a big-ticket item, such as jewelry, artwork or collectibles, to make sure it's covered by your home contents insurance. If it's not, you might be able to purchase additional insurance.

If this still seems like a daunting task, start with a limited set of items. According to the III, "it's better to have an incomplete inventory than nothing at all." If you have been in your home for a long time, start by documenting recent possessions and then move to older possessions.

Home Inventory Software

An online home inventory has its advantages over physical documentation. That's why the III developed its Know Your Stuff home inventory software program. "It's free and an easy way to organize material," Salvatore says. "It's also web-based. If your computer is destroyed during the disaster, you can access it from the nearest library."

Know Your Stuff allows you to set up an account, then electronically enter complete inventory information, including photographs of your home's exterior and the contents of its rooms--even the bathrooms. You can also upload scans of your receipts.

III vice president Michael Barry says that Know Your Stuff lets you set up a maintenance calendar to add new items and eliminate disposed items.

"If you do this twice a year, you should be OK," Barry says of updating the online home inventory.

Don't Wait Until Your Claim

Barry says the III has tracked usage of this software since its introduction some six years ago. "It always spikes after a disaster," he notes. "A week after the wildfires ended in California in 2007, it was downloaded in record numbers. You can make the insurance adjuster's job much easier if you have an electronic record of what was in your house."

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