On Dec. 17, 2012, Amanda Lambert came home to discover her family's home had been burglarized and ransacked.
"It was a week before Christmas and they completely wiped us out, causing a $25,000 insurance claim," Lambert says. "They stole all of the Christmas presents under our tree, all the computers, TVs, electronics, jewelry, some of my clothing. They even went as low as stealing the meat in our deep freezer."
It took Lambert and her husband several weeks to figure out what was taken. “Even after we filed our insurance claim we discovered little things were taken such as a hand-held document scanner. If we had a home inventory we wouldn’t have missed items like that,” Lambert says.
Dan Fraisse, an independent insurance agent in La Crescenta, Calif., shares another story.
"In April 2013, a customer had a total loss by fire. The fire spread so fast the family left the house with only the clothes on their back. The family 'had an idea' of what they had, but had to sift through the rubble -- a trying emotional experience -- to know exactly what was destroyed."
Most homeowners are like that family: They "have an idea" of everything they own, but when asked to write a detailed list of all their possessions, it's almost impossible.
This is especially true after experiencing the emotional trauma of watching your home burn to the ground or realizing it's been burglarized.
For these reasons, it's important to create what's known as a personal property home inventory. A home inventory plays an important role in your homeowners or renters insurance policy. for
What's a personal property home inventory?
A personal property home inventory is a list of all the personal property -- not "real" property -- in your home.
To understand the difference between personal property and real property, think about it this way: If you turned your home upside down and shook it, everything that fell out would be considered personal property.
Everything still attached -- such as the cabinets, lights and built-in bookcases -- is real property.
The biggest benefit of creating a home inventory is that it makes the claims process much easier if you suffer a loss because you can simply hand the list to your insurance agent. If this list doesn’t exist then you have to remember everything you own and write it down, which can be difficult.
It can also help you get the full amount from your insurance company when it's time for them to write you a check. This is also a good time to review your insurance policy to make your personal property is covered on a replacement cost basis and not on an actual cash value (ACV) basis.
Replacement cost means that in the event of a loss, you’ll get paid what the item is worth at today’s cost. Actual cash value means you would get paid for a similar item at today’s cost, minus depreciation. If you can’t figure out which type of coverage you have then call your insurance agent.
How do you create a home inventory?
There are many ways to make a home inventory. One option is to simply walk through each room in your home and videotape or photograph all of your contents. You can do this with your smartphone.
"Having video or still photos of belongings is a great idea," says Mike Hatmaker, agency owner at Brightway Insurance in Largo, Fla. "If you're videotaping, narrate the video, too, calling out what each item is, when you purchased it, [and the] purchase price. Then, keep an organized file of receipts for the items to back up the videotape."
Another option is to use a home inventory app to record all your contents. Here are some popular apps that are all available online or via an iPhone or Android app.
- Know Your Stuff: a free service provided by the Insurance Information Institute.
- State Farm Home Index: for State Farm customers.
- Liberty Mutual Home Gallery: for Liberty Mutual customers.
- Allstate Digital Locker: for Allstate customers.
Raphael Baker, agency owner at The Raphael Baker Agency in Atlanta, recommends taking as many photos as possible, particularly of expensive or valuable items.
The main point of a home inventory is to have a detailed, easily accessible list of all your personal property, so use whichever method is best. Store your video or pictures in a secure location, or back up your app.
How often should you update your home inventory?
Fraisse recommends updating your inventory at least once a year, or when there has been a major household purchase, such as a new appliance or piece of furniture.
Consider doing it the same time each year. Some homeowners choose the week after Christmas; it's easy to remember and many people make major purchases or receive gifts during that time.
When should you schedule high-value items -- and how much does it cost?
According to a sample homeowners insurance policy, there are two categories of personal property. The first category is "contents," such as furniture, dishes and clothing.
The second category is "scheduled" items, such as jewelry, watches, furs, guns, coins and art. These items have a maximum limit the insurance company will pay in the event of a loss. For example, a standard home policy typically places a $1,000 limit for any one item of jewelry, with a maximum limit of $1,500 for all jewelry in a single loss.
If you have items in these categories that are worth more than the standard limits then you’ll need to add something called a "rider" or "floater" to your policy.
"These are items of greater worth that you'll want to list out in detail and include purchase price," Hatmaker says. "And, as always, you'll want to retain receipts in a safe place."
If you decide to schedule an item, you’ll be charged a separate fee for that item based on the value.