You have to know your stuff to file a claim
The Ryan’s just had a catastrophic loss. While the family was out one day, their home was destroyed by fire. Other than the clothes they stood in and a few personal items in their cars, they lost everything. So when I ran into Kelly Ryan at the bookstore, I wasn’t surprised she made a beeline across the aisle to talk to me. “I just got the check for the building part of my policy, almost $300,000, so why is it taking so long to pay me for my contents? My kids want their stuff!”
I steered Kelly into the coffee shop and sat her down with a scone and a latte. I explained that with New Hampshire being a Value Policy state, the insurance company by law has to pay the insured the full amount of insurance on the dwelling in the event of a total loss. That made determining the amount of her claim easy and so she had a check for her house. But that is only the dwelling. All of the other coverages are adjusted just like any other loss by completing a detailed statement of loss. Or in other words, list every piece of furniture, appliance, electronic item, cooking gadget, shoe, book and other item of personal property that they owned with its value. And without a home inventory, that might be impossible.
We hear a lot about insuring the value of the home, making sure you have enough coverage to replace it, but not so much about the value of the possessions inside. Most policies offer a standard amount of coverage, whether it is 50% or 70% of the dwelling coverage. Then they further limit valuable items like jewelry and fragile items against theft or breakage. And you have to decide if those limits will replace the items you own. Knowing what you own will help you choose the right coverage, but completing a home inventory seems like a full time job.
I strongly recommend to my clients that they buy, borrow or rent a video camera. Spend $10 and get either a card for the camera or a flash drive to transfer the video to that can be dedicated just to the household inventory. Then take a walk around the house. It doesn’t matter if the house isn’t clean, no one will see this video unless you have a catastrophic loss and then, who will care about a little clutter or some dust bunnies. Film every nook, cranny, inside every closet, drawer, under every bed and every shelf in every room. Don’t forget the basement, attic and the garage. Now copy the video onto your computer for the next step and give the original card or drive to your mother for safe keeping or put it in a fireproof box or in a safety deposit box. There, you have done the first step. Do this even if you don’t do anything else. At least you have a visual reminder of your possessions in case you ever have to complete the statement of loss.
Now if you want to take the next step, start with your next large purchase. Write the serial number on the receipt and take a photo of the item with the receipt. Now you have a digital record of all if the info you need. Continue to do this for new purchases and if you find a little time, go back and do it for the older items. But be sure to periodically move the info to that saved card or drive and keep it off premises. Eventually as you continually replace older items, you will have a record of all of your property.
For more ideas, the National Association of Insurance Commissioners has published the following list of steps to take in creating a home inventory.
10 Steps to Complete a Home Inventory
1. Make a list of possessions, including ‘celebration’ purchases such as jewelry and fine art.
2. Think about family heirlooms, collections and furniture. Also consider items related to everyday leisure time, from flat-screen televisions to custom guitars.
3. Take note of commonplace items such as toys, CDs and clothing. And do not forget items you may only use occasionally such as holiday decorations, sports equipment, tools and high-ticket items kept outside your home such as landscape art and swing sets.
4. Attach copies of original sales receipts and/or appraisal documents to your inventory. Be sure to note model and serial numbers.
5. Group your possessions into logical categories, i.e., by hobby, by room in your home.
6. Carefully photograph or videotape each item and document a brief description including age, purchase price and estimated current value.
7. Remember to open drawers and closets to document what’s inside.
8. Store your home inventory and related documents in a safe, easily accessible place such as a secured site/file online, a fire-proof box or in a safe deposit box. You may want to share a copy with your insurance provider so he or she can make necessary updates to your coverage.
9. Review and update your inventory annually and whenever you make a significant purchase.
10. To get started, download the free myHOME Scr.APP.book app for iPhone® users by visiting the iTunes® App Store or searching ‘NAIC’ in the app store from your phone.
You can also call us at 877-352-2121 or go to our website at www.clarkmortenson.com/tools to print a simple home inventory checklist.