If you own a house, chances are you have homeowners insurance—more than 90% of homeowners have some sort of coverage. Most mortgage lenders require you to have it, but even if you’ve paid off your mortgage, it’s a very good idea to insure your home and your possessions (or most of it, at least) so you can be compensated for losses—the average loss due to property damage is $15,570 according to the Insurance Information Institute, after all. And property damage makes up almost 98% of all homeowners insurance claims.
So it’s kind of amazing that only 47% of homeowners have prepared a personal property inventory for insurance. This is just a listing of your possessions and their approximate value: It’s easy to put together, and it’s incredibly useful in the wake of any property damage you may suffer. If you haven’t taken an inventory, you should do it right away—and you should update it annually.
What is a personal property inventory?
A personal property inventory is just a list of your property (the house itself plus all the stuff in it) with documented or estimated values. There are several reasons you should go through this exercise on an annual basis:
Be organized. In the aftermath of a disaster—a fire, a flood, or any other traumatic experience that results in property damage—you’re not going to be in the best frame of mind. Having a prepared list of your losses will enable you to contact your insurer immediately to begin your claim.
Be prepared. Having documentary evidence of not just what you own but the condition and value of that stuff will help you get the best settlement from your insurance company. Documenting annually keeps up with improvements like renovations, upgrades to possessions of equipment, and other changes that can help prevent lowballing from your insurer.
Taxes. You may be able to claim losses on your taxes after a disaster, and having a list of possessions with valuations will make this process a lot easier.
Be properly covered. If you put your homeowners insurance policy in place years ago, you may not have enough coverage—in fact, more than half of all homeowners don’t have adequate insurance coverage for their home and possessions. Values and the cost of replacement change over time, so an annual personal property inventory for insurance can help you stay current.
What to document
So, what should you include in a personal property inventory? Pretty much everything—it’s better to be over-prepared than under-prepared, so if you’re uncertain if you should include something, include it to be safe. State Farm offers some comprehensive inventory tools that give you an idea of what to think about, but in general you should include the following in your inventory:
The house itself. Document the condition of your house itself, including any upgrades or renovations. New roof? Document it. Renovated kitchen? Document it. New boiler? Document it. Even if you haven’t changed anything, document that it’s in good condition and is being maintained properly so you won’t have any trouble getting maximum replacement value.
Your stuff. This is a pretty comprehensive list: Furniture, clothing, computers and electronics like gaming systems or televisions, jewelry, books, linens and bedding, collectibles and antiques, firearms, and tools or other equipment (like lawnmowers or generators).
Appliances. Unless you’ve included them in a renovation update, include all the appliances in the house, including HVAC equipment, laundry machines, and anything else you had to buy and install.
Outside spaces. Don’t forget your outside spaces, including decks, patios, pergolas, or any other structures or improvements to the property.
Property not stored in the house. Most homeowners insurance policies cover personal property even if it’s not stored in the house. Anything you keep in the trunk of your car, in a storage unit, or in a backyard shed should be included.
Your best bet is to document more rather than less. Better to document that fancy automated cat litter box and find out it’s not covered than to skip it and then find out you could have gotten some money for it.
How to document
The more information you can offer your insurer, the better. A few things to include with your personal property inventory:
Make a list. Start by simply making a list of your stuff, using one of the forms linked above (even if you’re not a State Farm customer), creating your own, or using an app like the free home inventory app offered by The National Association of Insurance Commissioners (NAIC).
Estimate value. For individual possessions, include a valuation. If you have a receipt showing what you paid for it, scan it or photograph it. If not, you can look up what it costs online and include a link to the store’s page, and you can have valuables like jewelry appraised by a professional, who can provide you with a written statement of value. You can use a depreciation calculator like this one to get an idea of how the value of something like a major appliance has declined due to age and wear.
Visuals. Take photos of your home and your possessions and include them with your inventory; this will show their condition prior to any disaster or damage. If taking a thousand photos of stuff seems like a lot of work, you can take a video instead, capturing each room of the house and the stuff in it a little more easily.
Additional materials. You should also include supplementary documentation such as maintenance records for major appliances or any aftermarket adjustments made that might increase the value of your property.
Once you’ve completed your inventory, store it someplace safe. If it’s digital, have a backup on a thumb drive or in the cloud. If it’s on paper, make sure it’s stored in a safe, fireproof box or safe with your other important documents. You should consider sending a copy to your insurance agent each year so they can add it to your file and act as an extra backup.
Having this inventory ready to go means one less thing to think about when you’re recovering from a disaster or a major loss of property, and it will make the whole process of getting a settlement check a little faster and easier. If you haven’t done an inventory lately, do it today—and make a note to do it again next year.
