How much will you lose when disaster strikes? In the aftermath of a burglary, property damage, or natural disaster, doing one thing can save you money by protecting your house.
We’re talking about creating a home inventory. It’s something we recommend doing far before a worst-case scenario ever occurs. A home inventory is a list you’ll want to have on hand (or saved to the cloud) to verify your losses and get your insurance claim settled faster after a disaster. As the Insurance Information Institute points out, conducting a thorough home inventory can also help you to avoid overpaying on your homeowner’s insurance.
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Where does your state stand on this home inventory rule?
If you want to know how to take an accurate home inventory, it helps to go straight to the source. Talk to the people who are in the business. Ronald F. Delo, CEO, P.A., of Insurance Claim Consultants, Inc., tells us that one simple rule can be a game-changer for homeowners taking a home inventory. It’s called the Broad Evidence Rule, and it’s used for inclusive valuation.
“It allows any evidence such as Internet comparisons of an item of like kind, quality, age, and condition that tends to establish the correct estimated property value of an item,” Delo explains. “Each individual state may or may not have certain interpretations, so check to make sure the state you live in adheres to the Broad Evidence Rule/s.”
The Broad Evidence Rule can provide a broader scope of valuation for property damage. But it’s still important to remember that you can only collect for what you can prove you lost. Nancy D. Butler, CFP®, CDFA™, CLTC, owner of “Above All Else, Success in Life and Business,” national professional motivational speaker, and business and financial planning coach, recommends obtaining records and pictures of all household items for casualty insurance purposes. (More on that below.)
“A home inventory is one of the best resources you can have after a disaster or theft. It can help you get your insurance claims processed more easily and can help to lessen your stress level,” Butler says.
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6 ways to create a home inventory any claim adjuster would be proud of
Where to begin? These are the top six tips we share with our clients to keep their homes and valuables covered:
1. Use a spreadsheet.
“If you so choose to do your inventory yourself [versus hiring an insurance claim consultant],” Delo says, “go to one room of the house and go to one wall of that room and write down everything that would have been on that wall. Do the same for the remaining walls and floor. Keep track of quantities, brand, age, and cost for each item.” And don’t forget to cover your bases. Save your master spreadsheet to your PC and a cloud storage account, like Dropbox.
Sarah Brown, home safety expert for SafeWise, an online home and community safety resource, agrees, “No matter how you choose to track your possessions, you should write down the following descriptions with each option: a description of the item, the serial number, a rough purchase date, and an estimated value of the item.”
2. Start with the big stuff.
Think jewelry, collectibles, and artwork. Brown says that when inventorying clothes, you only need to specifically note those that are particularly valuable. Otherwise, group the clothes into categories and count the number of that item you own.
3. Take pictures.
Go room by room to document all belongings, including what’s in your closets and drawers. Digital pictures work well, but you could cover more surface area in a room by taking a 360 picture. A smartphone-connected 360 VR camera placed in the center of a room can capture an entire room in one shot. A free service like Orbix360 will let users store their virtual-reality 360 pictures safely offsite, but please note that a 360 VR camera is needed.
Butler also suggests video. “A videotape can be very effective and easier get the job done. You may prefer to talk about everything on video rather than having to write it all down. You may also find it easier to video the model numbers and serial numbers. Then keep this inventory somewhere safe, like a fireproof and waterproof safe or safety deposit box,” she says.
4. Cross-check your master list.
If you want to check (and double-check) your spreadsheet, there’s an app for that. The National Association of Insurance Commissioners’ (NAIC) free home inventory app organizes valuables by image, description, barcode, and serial number.
For burglary-specific protection against property damage, the free Centriq app details a home’s layout, technology, and features, all in one place. This information can be easily transferred when a home sells. Cofounder James Sheppard expanded the Centriq technology to include user-friendly home inventory input after his home was burglarized in 2016. His advice? Don’t get bogged down in the details. Focus on the important stuff first. “In building a home inventory, it’s more important that you go broad than deep. Meaning, you never know what could get damaged or stolen — whether it’s a burglary or natural disaster of some kind. So, capture just a little but for a lot of things. Snap two photos. One to show you actually had the thing and another of the serial number.”
5. Keep it accurate.
Insurance fraud is a felony, so stick with the facts. “It may sound obvious, but you should walk throughout your home to inventory your items,” Brown says. Trying to create an inventory from memory can be very difficult. There’s going to be something you’re going to overestimate or miss.
There’s another great app that’s totally free. Use our LoanFly app to search for homes, get prequalified, calculate your monthly mortgage payment, and more.
6. Save your receipts.
We mentioned this above, but it can’t be overstated. It’s critical to catalog receipts to confirm the cost of pricier belongings. Sheppard recommends using Centriq to capture pictures of important documents and receipts for your valuables, which can be organized by room, owner, or theme.
You can make creating a home inventory easy — download our free spreadsheet here.
Putting together this home inventory is going to protect your house and your belongings, but what about protecting your mortgage? Schedule a quick checkup with one of our loan officers to see if your home loan is still the right fit. A refinance could save you money on your monthly mortgage payment.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.