Do I need an inventory of all my possessions?
I get this question a lot, most of the time when I insure a client’s home for the first time, this question comes up. The answer is most likely Yes.
Insurance is an indemnification contract. That means that the insurance company is required to make you “whole” (within the limits of the policy you purchase, underinsurance is a separate issue). If you have a policy with Replacement coverage on your personal property, the insurance will pay for new, similar quality items as what you had. The key here is “similar quality to what you had”. How can you tell the insurance company what you had and how can they write a check if you don’t have an inventory. The best time to create an inventory is before you need it, while all your property is un-charred and present in your home.
With that, I will say that according to a 2012 survey from the National Association of Insurance Commissioners shows that more than half of Americans do not have a home inventory. This means that the inventory is in their heads. If your only list of possessions is in your head, how easy will it be to create a list that an insurance adjuster can use. Add to this task the stress that you would be under after this type of loss and you can see how important a home inventory can be.
There are several ways to do a home inventory. Here are a few ideas:
- You could pay someone to do it for you. While this is expensive, it gets the job done. Just remember to update it each year or after any major purchase.
- Use a computer and make a spreadsheet. This is more time consuming but it’s free.
- Download a free Inventory Program. https://www.knowyourstuff.org/iii/login.html
- Take pictures. Add a description with any values you know of.
- Video – This is my favorite because everyone has a cell phone that can be used. Just open all your closets and cabinets, walk through the house and narrate as you go describing things and giving values. The main reason I like this method is that it can be quickly updated each year.
Whatever method you chose, make sure to keep a record off site.
While there are companies that allow for a payout of the policy limits in case of a total loss without an inventory, the bulk of insurance policies will require this. Better to have it and not need it than to need it and not have it.