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You buy homeowners insurance to protect your investment in your property in case the unimaginable happens.
Imagine your home goes up in flames and you have to replace everything on your own. Would you be able to list everything in your house when filing a claim? Most likely not, especially when you’re distraught over the circumstances.
We all hope a day like that never comes, but if it does there’s a way to prepare beforehand: Having a home inventory.
Having a home inventory will simplify the claims process. And it will help you maximize your claim so you get everything you’re entitled to. If you’ve forgotten some of what you own, you won’t be making a claim for it.
An inventory can also help you select the appropriate amount of coverage for your possessions when you buy or renew your home insurance policy.
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Here are a few things to take into account when making an inventory.
What Should I Include in a Home Inventory?
Simply put, include every possession that’s found in your home. Not only do you need a list of items, you should also include this information when possible:
- The date you purchased the item
- Serial numbers
- An estimate of the value of the item
- A description of each item (with make and model details if you have them)
It’s unrealistic to assume you have receipts for everything in your home, but save receipts for large or expensive items when possible.
For certain items like clothes, you can list the number and estimated value. For example: 12 dresses, 20 shirts and 10 pairs of shoes.
Don’t forget to make an inventory of any possessions you’re storing somewhere else, like a storage facility. If the facility is destroyed you’ll want a comprehensive list of what you lost.
How to Create a Home Inventory
Before you start emptying out closets and drawers, decide how you’re going to record your home inventory. Here are possibilities:
- Written list. You could start a written list from scratch, and some insurance companies offer home inventory checklists to help you sort through your stuff.
- Video recording. You can record a video of all of your possessions. If a video isn’t your thing, you can do a series of photographs to document your belongings. Remember to take photos of the items in all your drawers and closets.
- Home inventory app. Many free apps are available such as Allstate Digital Locker, BluePlum Home Inventory, Encircle Home Inventory and Magic Home Inventory. These apps help you easily record your possessions.
Using a spreadsheet to organize a written list may make the process feel less overwhelming. To begin:
- Divide your list into specific rooms. Start with one room such as your kitchen and list everything in that room. You should include appliances, cookware, utensils and dishes. Open drawers and cabinets and record everything.
- Separate items into categories. Another option is to organize items into categories—for example, furniture, antiques, jewelry and other miscellaneous items.
- Couple your list with photos and videos. You may want to take a photo of the serial number of each item if possible.
Store and keep your inventory list safe. No matter how you choose to take your inventory, you want to keep it safe. After all of your hard work, it would be terrible to see it destroyed by fire or water. Store your documents in a fireproof safe, deposit box or the digital cloud.
How Do I Know If I Have Enough Home Insurance?
Check your home insurance policy for your coverage limit for personal property, or call your home insurance agent for help. Personal property limits usually fall somewhere between 50 percent to 70 percent of your dwelling coverage. If you have $500,000 of dwelling coverage, you may have between $250,000 to $350,000 of personal property coverage.
Standard home insurance policies put coverage limits on the theft of certain items like jewelry and watches.
You can add more coverage for belongings. If you find that the value of your belongings surpasses your policy limits, you can generally buy additional personal property coverage. For high-value items like expensive jewelry, consider “scheduling” the items so that they’re insured for their full value.
You may need to buy separate policies to cover certain natural disasters. Another point to consider is that homeowners insurance policies don’t cover damage from flooding or earthquakes. If you live in an area prone to these disasters, consider buying flood insurance and/or earthquake insurance.
Look for replacement cost coverage. Consider a homeowners insurance policy that covers replacement cost instead of actual cash value. With actual cash value, your insurer will only reimburse you for the value of possessions minus depreciation. Selecting replacement cost coverage means you’ll be reimbursed for the cost of new, similar items.
Ashley Kilroy is a personal finance writer and content creator. In addition to being a contributing writer at Forbes, she writes for solo entrepreneurs as well as for Fortune 500 companies.