Property owners need to have homeowners insurance coverage to protect their investment in their property. Mortgage lenders require liability insurance, but property owners will typically also want to buy coverage for their personal property. This includes belongings like furniture or electronics and all of the other possessions in a house that would be expensive to replace.
When buying personal property coverage, it’s important for homeowners to create a home inventory. This could be a written list or a digital inventory with photographs. It should include a list of all possessions in the home, ranging from electronics to jewelry to clothing and toys.
While it’s a lot of work to create a home inventory, there are two big reasons why doing so is important. Here’s what they are.
A home inventory can help property owners determine how much coverage they need
One of the most important reasons to create a home inventory is to determine an appropriate amount of personal property protection.
Typically, home insurers provide coverage for property equal to a percentage of the dwelling’s value. For example, an insurer may set a default coverage limit equal to 50% of the value of the home, so a property owner with a $500,000 home would have $250,000 in personal property coverage.
However, it’s important to make sure the coverage is sufficient to replace all personal property. And making an inventory can make that easier. By making a list of all of the items kept in the home, including furniture, electronics, jewelry, clothes, and more, homeowners can get an accurate estimate of what their items are worth. This can help them ensure their coverage limits are high enough.
There are also some specific limitations on certain types of property. For example, insurers usually cap coverage for jewelry, furs, and art at $2,500. A home inventory can help property owners discover if they are likely to exceed these smaller limits, so they can get an add-on policy to cover these specialized valuable items.
A home inventory can expedite an insurance claim if covered losses occur
A home inventory is also very important in case something goes wrong with the property.
When making a claim to replace personal items, homeowners need to prove what they owned, what was damaged, and how much it was worth. When many items are destroyed, such as a house full of possessions by a fire, it can be hard to document this after the fact. Having the inventory prepared ahead of time helps the insurer see what items were in the home and covered by the policy.
The good news is, many insurers provide resources such as apps or checklists for making a home inventory. And even walking through the home and taking photos and videos of all of the items along with a description of them could be sufficient.
Don’t go another day without creating this important document as no one can predict when tragedy will strike and when they will need coverage.
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