A Home Inventory Your Claims Adjuster Will Love
Do you have a home inventory? If you’re like most homeowners, the answer is no. What would happen if your house burned down? Or what if a windstorm blew the roof off and all the contents of your home were ruined by the rain that came in after. “My insurance would pay to rebuild it!” most people would respond, which is true, for the building itself. But the coverage for the structure of your home is just one part of a homeowners policy. This is called Coverage A, and it’s the amount of money available to reconstruct your home after a covered loss.
In addition to Coverage A, on a standard homeowners policy there is also Coverage B, which covers other structures on your property, like fences, sheds, or detached garages. Right now, we are going to focus on the coverage for your personal property, Coverage C.
Why is it important to have a home inventory? When you have a loss, the insurance company doesn’t just write you one big check for the amount of Coverage C you purchased (typically, this is 50% of Coverage A, although it can vary and many companies allow you to specify the amount, within certain boundaries). Instead, you will be asked for an inventory of items that were lost, and their value. This can be very difficult and emotionally taxing after a disaster, so the best plan is to make one in advance. The more documentation you can provide your adjuster with, the faster your claim will be settled, plus you will maximize your claim settlement.
It's important to remember that coverage amounts are limits, not guaranteed payment amounts. They are the maximum you will be paid. If the insurance company believes the amount of the actual loss is lower than the limit of coverage, they will only pay the lesser amount. Let’s go over an example.
You purchased a brand new 77” LG OLED 4K TV. Right now, that’s about a $3,400 television. But even though you kept your receipt, it was in your house which burned down. The TV melted in the fire and you can’t tell from looking at it what model or manufacturer it was. If you just list “Large Flat Screen TV” instead of a detailed description of the make and model, your adjuster may very well find a 65” LCD TV at Walmart for $499, and put that down as the value of the item. If you can document that you had a very specific TV that is worth much more than the average, your adjuster will value it as such, and your overall claim settlement will be higher.
Another important aspect of your policy to consider is whether or not you have replacement cost coverage or actual cash value. This can make a huge difference when your claim is settled. With Actual Cash Value coverage, your claim will be paid according to the depreciated value of the things that were lost. If you purchased a couch for $2,000 five years ago, that couch is no longer brand new and has depreciated since then. Your adjuster will use a guide to determine the average depreciation of a couch and you will be paid a reduced amount.
With Replacement Cost Coverage, you’ll be paid what it would cost to buy the same item again, new. It is crucial to know what coverage your policy has. This is a very simple question your agent can answer if you don’t already know. If you don’t have an agent, this is a great example of why you should get one.
Either way, an inventory is an important part of getting your claim paid so that you maximize the settlement and expedite the process, as well as ensuring you don’t forget about something. Trying to create an inventory after a total loss is a sure way to miss something important, like Christmas decorations that spend eleven months a year in the attic, or other items that see only sporadic use.
What’s the best way to put together a home contents inventory?
Start with a spreadsheet. We’ve included a link at the bottom to download a free template in this article that you can use to get started. You can use that or create your own. What goes on it?
Here are some recommendations, although you can definitely include more if you want to.
Furniture (sofas, dining room sets, recliners, and other items of furniture can add up quickly.)
Electronics (TVs, computers, printers, game consoles, etc.)
Large Appliances (refrigerators, washer/dryer)
Small Appliances (blenders, microwaves, coffee makers)
Clothing (you don’t have to list every t-shirt or pair of socks, but if you have a custom tailored suit or designer gown, you should include it. For more mundane items, an estimate is fine. E.g. 20 men’s t-shirts, $20 each)
Rugs
Kitchen utensils
Tools
Things in your yard or garage, like your grill or patio furniture.
You may be wondering now about certain valuables you might own, like jewelry, musical instruments, computers, firearms, power tools, and more. Those items are typically covered up to a sublimit. What’s a sublimit? It’s a lower limit of coverage for certain items due to their high value nature. Often, items subject to a sublimit are very portable as well, putting them at a bigger risk for theft. It’s a lot easier to steal a diamond ring or an electric guitar than it is a couch or refrigerator.
Here is a list of categories of items that are typically covered at a lower sublimit, as well as a typical sublimit for the item. These would require a special endorsement or separate policy to cover. Remember, this is the total amount of coverage for all items in the category, not per item. Please keep in mind this is a general list, and not exhaustive. It is important that you know what your policy covers and how much coverage is available. This is another great question to ask your agent.
Computers: $1,500. This is the sublimit most people will run into trouble with. If you have one high-end laptop, you could easily be over this limit. So make sure you include your computers on your inventory, but if they are over your sublimit in value, you need to add them to your policy as scheduled personal property. Your agent can help you with this.
Silverware: $2,500
Fine Art: $2,500
Firearms: $2,000
Tools: $5,000
Furs: $1,500
Home-Theater Systems: $1,500
Money, Gold and Silver Coins: $200
Jewelry, Watches: $1,000 to $5,000
Musical Instruments: $2,500
Stamps: $1,500
Also, certain appliances that you would think of as “part of the house” like a hot water heater, a built-in range, or a dishwasher are generally going to be covered by Coverage A, not Coverage C. However, it doesn’t hurt to include them on your inventory, particularly if you have high end appliances, as your adjuster may not be aware of these items when settling the dwelling portion of the claim.
As you put together your inventory, it is also important to include enough detail to maximize your settlement, as well as stop any questions about whether or not you actually owned something you’re claiming before they start. Here is some important information to include:
The name or description of the item. For example “Toaster” or “Men’s Two-Piece Suit”
The manufacturer or brand name of the item.
Model Number, if applicable. Electronics, appliances, and many other products often have a model name or number. If the item does not have one you can leave it blank.
Serial Number, if applicable. Most consumer electronics do have a serial number somewhere on the item. These are helpful because they can be used to look up the exact details of a product if there is a question in the future.
The Cost new. If you don’t know, an estimate is acceptable, or you can search online to see what it retails for now. For items no longer made, pick the most similar item from the same brand you can find.
Photographs of the item. A single photo of the item in your home is very helpful in settling the claim.
Receipts. Scans or photographs of receipts where available are also important and can show not only that you purchased the item, but when you bought it and how much you paid.
You should also include a “total” row at the bottom of the spreadsheet so you can check the total dollar amount represented by everything on your inventory. This is an easy way to check and see if you’re underinsured. It’s okay to be a little overinsured. This is good cushion in case you do forget to add a few things or the price of certain things goes way up, but being underinsured means you’re paying the difference to put your life back together. If the total value of all the items on your inventory is higher than your Coverage C amount, then you need consider upping that coverage amount if possible. This is a question for your agent.
Once your inventory is complete, we recommend creating a folder using one of the many cloud storage providers to save the photos of your home’s contents as well as any scanned receipts you have. Google, Dropbox, and Amazon all offer free plans with more than enough storage for most people, and there are many low-cost paid options as well that can safely store your photos and the inventory spreadsheet. If you aren’t sure how to set this up, chances are a friend or relative can help you with this. Even if your home is destroyed, the photos and inventory will be safely backed up in the cloud in a format that you can very easily send to your adjuster.
Remember, adjusters are often overworked, with more claims on their desk than they can get to quickly. By providing a detailed inventory with photographic evidence of everything that was lost, you can make your adjuster’s life a lot easier, which in turn makes your life easier when they pay out your claim quickly and without the back and forth that often accompanies such an experience.
Once you’ve created your inventory, just make sure to update it either once a year, or any time you make a major purchase, like new furniture, expensive electronics, or anything else valuable you need to protect. It’s much easier to include all of the relevant information, like purchase price, serial numbers, and a copy of the receipt at the time of purchase, since you already have all of that handy, so it isn’t a major chore to add this information to your inventory.
Putting together a home inventory is an investment of time that seems high at first, but if you ask anyone who has been through a major claim, you can bet they’ll tell you they either wish they’d had it beforehand, or were glad they’d already made it. If you don’t have hours to sit down and complete the whole thing at once, just get started. Before long, you’ll have a complete inventory of your home’s contents as well as a great tool for assessing your coverage needs. Maybe you need to adjust your contents coverage, or maybe you need to consider either scheduling a high-value piece of property like and engagement ring or piano. Most importantly, you’ll be prepared if the worst does happen, and you’ll have one less thing to deal with in the aftermath of a disaster.