If you rent or own a home, apartment, basement or shoebox you should have some form of insurance whether that is Homeowners or Renters insurance. Insurance is basic but what happens if God forbid there’s a fire, flood, or other natural disaster and you need to go about the process of rebuilding your life and your home? If you have a home inventory you’ll be able to easily document for the insurance company your valuables so that you can go about the business of healing and getting on with your life. But the question is how do I go about building that inventory.
Do it Yourself Home Inventory with a Digital or Video Camera
I talked to several insurance companies and they all say the same thing. Pictures or video are the best way to document your assets. Wander through your house and photograph everything in it. If you are using a video camera you can narrate as you go. Open drawers, closets, and cabinets and photograph the documents. If they are larger ticket items you can maintain a list as well and document the serial numbers if available. It’s also a good idea for big ticket items to include the receipts and any appraisals if you have them with your inventory. Don’t forget to photograph things like lighting fixtures, fans, appliances, the exterior of your domicile and any sort of upgrades you may have done to your dwelling.
Once you are done creating your home inventory you should store it in an off site location like a relatives house or better yet in a safe deposit box. Just somewhere other than your current dwelling.
Free Software Home Inventory
Fortunately there is also a great free software option called Know Your Stuff. It’s a free web based service provided by the Insurance Information Institute and is really a comprehensive solution for inventorying your home with pictures and data. You go through and add each room in the system and then you complete the inventory for that room uploading pictures and documenting as you go. The system is dirt simple to use, costs nothing, and your data is stored in Amazon’s S3 Secure Storage which replicates your data to multiple locations providing you with great disaster recovery options.
Three Different Levels of Insurance Coverage
An important note concerning homeowner or renters insurance are the 3 different levels of policies presented in order from least coverage to most and also would match with cost from lowest to highest. If in doubt talk with your insurance agent or company to see how you’re covered.
Actual Cash Value
With this policy the insurance company pays to replace your home or possessions subtracting a deduction for depreciation. So if you have some nice electronic equipment they’ll pay for what it’s worth today rather than the cost to actually buy you a new version.
With replacement cost insurance the policy pays the cost of replacing your home or your possessions without a deduction for depreciation. This would be essentially replacing your possessions with new.
Guaranteed or Extended Replacement Cost
You get the highest level of protection with the Guaranteed Replacement Cost insurance policy. This policy will pay to reconstruct your home and replace your posessions as it was before the disaster even if it goes above your policy limit. This would cover such items as an increase in material prices due to shortages like would occur after a large scale natural disaster.
Unless you already have a good idea of how you’re covered it’s in your best interest to have a conversation with your insurance agent to be sure you fully understand your policy. The last thing you want to do is figure out your true coverage after a disaster has occurred.
An Excellent Exercise to Calculate Your Net Worth
While you are compiling your home inventory it’s an excellent time to tabulate your assets and use this as a means to calculate your true net worth. You might be surprised how all of your possessions add up. Your net worth is merely all of your assets, stocks, retirement, cash, vehicles, home subtracting your liabilities such as mortgage, credit cards and loans.