A household inventory is a complete and detailed written list of all the personal property located in your dwelling or stored in other structures like garages and tool sheds. Your inventory should include your possessions as well as items owned by individuals who are also insured under your homeowners policy, such as family members, other household residents, and domestic employees. You should prepare an inventory whenever you move into a new dwelling and update it periodically (say once every six months) to keep track of new and discarded items.
Why do it?
Total recall of all the contents of any one room is quite an accomplishment for any of us, even at the calmest of moments. Remembering all the contents of your house and garage after a fire, theft, or other calamity is practically impossible. Yet that’s what you’ll be asked to do when you submit a claim on your homeowners insurance, unless you previously prepared a written inventory of your household possessions and property. Omitting or failing to include an adequate description of an item may prevent you from receiving compensation from your insurance company. Considering that the whole point of buying homeowners insurance is to obtain compensation for financial loss, why bet the farm (or your house and its contents) on your memory?
You’ll also find that a detailed inventory helps when filing a police report or when trying to prove a loss to the Internal Revenue Service.
What should an inventory contain?
Under the terms of your homeowners policy, your claim for damaged or stolen personal property should show the quantity, description, actual cash value (if different from the purchase price), and amount of loss associated with each item. Copies of bills, receipts, and other documents that justify the figures in your claim are also requested. It makes sense for your inventory to include that information, as well as the purchase price and purchase date of every item. It’s a good idea to note serial numbers for appliances and electrical equipment.
Listing the contents of each room and building separately helps organize the inventory and promotes completeness. Make sure you include all the contents of every room, excluding only the four walls, ceiling, and floor. Include rugs and carpets, wall hangings, curtains, blinds, and draperies. Be descriptive and refer to colors, dimensions, manufacturers, and composite materials whenever you can. Make sure you include component parts and the contents of drawers, shelves, closets, storage boxes, and built-in cabinets. For instance, describe not only the bed but the headboard, mattress, and bedding. Try to identify every item that you would have to box or carry out if you were to move out of the house or apartment. For clothing, make sure you give a full description of any expensive items, such as leather or wool coats, boots, suits, or formal wear. If you’d rather not describe every item of clothing, at least list quantities (e.g., six wool sweaters, two pairs of sneakers, two pairs of corduroy trousers). Make sure to include the items stored in your attic, basement, garage, or outbuildings. Sports equipment tends to be expensive and should be described in as much detail as possible. Don’t forget tools and outdoor equipment like lawn furniture and barbecue grills.
Just Do It
You won’t be graded on your inventory for accuracy, completeness, or legibility. If you can’t stand the soup-to-nuts approach, at least take the time to jot down any items valued at $50 or more. Since a picture’s worth a thousand words, consider taking a photograph or videotape of each room, with separate photos for big-ticket items. If you use a camera, make sure you label each photo with notes about the items shown. If you use a video camera, provide a running commentary describing every item (date of purchase, price, etc.) that comes into view. Hopefully, you’ll never have to use your inventory, but if worse comes to worst, and you have to deal with a calamity, you’ll be happy you took the time to make a permanent record of all your possessions.
Contact your homeowners insurance agent. Some agents offer a videotaped inventory as a free service to their customers.
Should you use your personal computer to prepare and save your inventory?
Use the writing implement of your choice, be it a computer, typewriter, pen, or crayon. Saving the inventory on your hard drive or a floppy disk is fine, as long as you also keep a written copy or duplicate disk somewhere else in case your computer or original disk is destroyed, damaged, or stolen. The best storage location for your inventory is a safe-deposit box. Failing that, any fireproof storage unit that is not accessible to home burglars will do. It’s a good idea to give a copy of your inventory or disk to your lawyer, accountant, trusted friend, or relative.
You have a lot of stuff stored at your parents’ house. Should you include those items in your inventory?
Yes. Your homeowners policy covers you for damage to your personal property when it is located anywhere in the world. So include any items that you have stored in other locations and don’t forget to list property that you’ve lent to other people.
You’ve written up a lengthy description and taken several photos of your uncle’s Academy Award, which you now own. Is that enough to protect you if it’s stolen or destroyed?
Not necessarily. You’ve covered yourself as far as the inventory is concerned, but you’re still risking an uncovered loss because your policy sets a $2,500 coverage limit for gold trophies. If the Oscar is worth more than $2,500, you should consider obtaining a Scheduled Personal Property Endorsement to increase the coverage limit.
If you have questions, contact the Experts at Henssler Financial: