Marc A. Hebert's Money Sense: Having a home inventory will make it easier if you suffer a loss
YOU HAVE just suffered a loss, whether it is due to fire, theft or natural disaster, an insurance claim will need to be filed. You might also need to file a police report or provide proof to the IRS for the amount you took as a casualty loss. With any loss, it is all in the details.
Relying on your memory is probably not the best way to go. You might need to remember everything from the basement to the attic, furniture, appliances, etc. Some items probably get used every day, but others not so often. Making a list can help, but also can get pretty overwhelming. A detailed home inventory can make things easier during trying times. It is the starting place for negotiating replacement costs with your insurance company.
Start the list by touring your property and making a visual record of everything you have. Go room by room. Even the shed on the property is fair game. Open cabinets, closets, and drawers. Make sure to list the large ticket items and then go for the smaller stuff.
You can keep the list by hand. Just a piece of paper and a notebook will certainly do. There are also mobile apps and software programs available to help with this process. Some insurance companies also have digital inventory solutions, so be sure to ask yours. Videos or digital pictures are also possibilities. Having a video camera, for example, will also allow you to narrate as you go along.
You will want to note the serial number, model number, purchase date, and estimated value. Keep receipts or credit card statements for the big ticket items. These could be scanned by electronic filing. Serial/model numbers are usually located on the back or bottom of appliances or electronics.
If you have valuables that have been appraised, be sure to locate the appraisals. Now is a good time to talk with your insurance agent to see if these valuables should be separately scheduled on your homeowner's policy. If these are lost, the coverage might not be enough to replace the item as coverage could be limited unless scheduled. Your insurance company needs to know about these before you experience a loss.
Once you have done all this work, be sure to keep it protected. You will want to store the information off the premises, after all, this isn't going to help you if it is burned up in a fire. You might consider a safety deposit box, put it in the cloud, or just give it to a good friend or family member for safe keeping.
It is a good plan to review your inventory at least once a year. Remove items that are no longer there and add the new ones. Be sure to keep the receipts for big ticket items as you go along. This will save you having to find these later.
You might also share the list with your insurance agent. He or she could help you decide if your current coverage and policy limits are still adequate.
You might have a choice on how to insure your belongings. You can get either actual cash value or replacement cost coverage. Actual cash value considers the initial purchase cost or market value of the item minus depreciation. Replacement cost coverage allows you to replace your personal property at today's market price. Replacement cost coverage is more expensive than actual cash value coverage.
After all, that is why we have insurance, to help us rebuild our home or replace our possessions when things happen that are outside our control.
Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at email@example.com. Your question and his response might appear in a future column.