What Is a Home Inventory, and Why You Need One
A fire, theft, or natural disaster is unsettling. On top of that, you have to list your possessions and their worth just to replace what you lost. That may be impossible without proper foresight and even harder while processing grief. It’s why creating a home inventory can make all the difference for you, your family, and your peace of mind.
What Is a Home Inventory?
A home inventory is a list of items in your home, condo, or apartment. It accounts for all your personal belongings in case of an accident. You can categorize your items by room, type, value, or other relevant characteristics.
Having a home inventory speeds up the insurance claims process in case of property damage, loss, or theft. That way, you can receive your claims quicker and with less hassle. The list also ensures you have the right insurance coverage and can verify tax-deductible property losses.
When Should I Make a Home Inventory?
What are you doing right now? There’s no time like the present to make a home inventory. Even a cursory list of items is better than nothing.
Creating a home inventory is especially wise if you’re a new homeowner. When you move to a new house, all your possessions are packed and sorted. As you unpack, it’s a perfect opportunity to record them. New homeowners also tend to have a manageable number of belongings, so the list is easy to make and even easier to maintain.
You should create a home inventory when choosing homeowners or renters insurance, too. Your insurance policy reflects the value of your property and belongings. For instance, an HO-2 provides limited cover, while an HO-5 covers everything. Some policies have exclusions for select items, like jewelry, art, wine, and athletic equipment.
How Do I Create a Home Inventory?
Select the method that is easiest for you. For some people that means recording videos on their phone or tablet. Other people may prefer a combination of photos and paper. While a photo or video is not enough to access insurance benefits by themselves, they are effective starting points to initiate your claim.
There are plenty of tools to create written, digital, and visual records. Check your phone's app store for apps that can help.
RECORD ONE AREA AT A TIME
Patience young homeowner. Take your time when creating each entry. Start small with a cabinet or closet. Once you finish recording, move on to the next section.
Make thorough notes of each possession. That includes a general description as well as the condition, make, model, appraisal value, and quantity. A sample entry might read like, “1x Purple Hybrid Premier Mattress, $1,749, no visible wear, one small wine stain on the corner.” If you don’t find all this information, that’s alright. Be as thorough as possible without driving yourself crazy.
TAKE PLENTY OF PICTURES
There is no such as too many pictures. (Fifty photos of your bike might be overkill, but you catch our drift.) Images provide proof of ownership. They also document the item’s condition before the loss and other essential details.
CALCULATE COSTS
There is a difference between the actual cash value (ACV) of an item and the replacement cost. ACV is the depreciated value of an item at the time of loss. Replacement cost combines that with the cost to replace the item. Replacement cost is higher and returns you to the same position before the loss.
The critical question is, "Does my insurance company cover replacement cost or ACV?" This is a good time to review your policy and clarify those concerns. The last thing you want to find is an unsatisfactory answer after property loss.
KEEP YOUR RECEIPTS
Receipts are your best friend when proving your home inventory’s value. They also verify ownership, make, model, and origin. We recommend keeping a digital file of all your receipts just in case.
There are plenty of apps that help keep a close eye on your spending. Expensify is the most popular app with five million users, receipt-scanning features, and personal expense tracking. Other notable option include Shoeboxed, Smart Receipts, and Veryfi.
Where Should I Store My Home Inventory?
Don’t let your home inventory become a loss. Keep your documents somewhere secure, such as a computer, cloud, or safe deposit box. Storing it in multiple places is ideal for redundancy. Technology is your ally here. For instance, a cloud-based list lets you safely access and edit the contents wherever you want. You can even send a copy to your insurance agent, who will see if you have the appropriate insurance.
The Bottom Line
Your home inventory is an essential resource in case of property loss. Even if you don’t think the items in your home are worth much, you should make one anyway. The total value may be more than you think.
Documenting your belongings gives you the leverage you need to access your claim benefits. The key is thoroughly detailing each insurable item. When you finish, don't forget to preserve it in at least two secure places.
