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2.7.2010: Why Conduct a Home Inventory?

The Insurance Information Institute designated four types of coverage in an insurance policy.¹ For the purpose of this article, the first two types of coverage will be discussed.

The first type of coverage is for the house’s structure. This type of coverage means that if your home is damaged due to certain disasters, the policy will cover the cost of repairs. This coverage typically covers any standing structures on your property (e.g., garage or tool shed) at a percentage of your coverage on the home.¹

The second type of coverage includes your material possessions. Many policies will cover up to 50 to 70 percent of the insurance designated for your home on material belongings.¹ Furthermore, your belongings are covered even if they are not located within the home (e.g., property is damaged or stolen while traveling).¹

Remember that the trees, flowers, and other plants on the property are covered by your insurance policy. Typically, these items are covered for a small percentage (e.g., five percent) of the amount designated for the home. Please note, however, that the types of disasters covered are more limited for these items.¹

Homeowners run the risk of not taking out enough insurance to cover their possessions. By conducting a home inventory of all your personal belongings and property, an insurance agent will be better able to help you select an insurance policy that will meet your needs.^2/3

Basic Tips

Your home inventory should be updated every year. This is especially true if you have recently bought expensive items. The yearly update allows yourself enough time to list items previously overlooked (e.g., the rug that has been on the floor for five years).⁴

Remember to keep the receipts of your household items, as this will show proof of the actual price.⁴ Officials recommend taking photos of your personal belongings, the inside and outside of the home, as well as any other structures on your property. These photos, along with the completed home inventory, should be stored in a safe place (e.g., safe deposit box).^2/3

After a Disaster

When a disaster occurs, the last task anyone wants to complete is to create a list of all their belongings. You have a higher likelihood of forgetting items, especially if most of your possessions are lost in a fire. If a disaster does strike your home, the inventory you completed on your household will show proof of ownership on the possessions lost when you file a claim.³

1 Insurance Information Institute. (2010). What is in a standard homeowner’s insurance policy? Retrieved January 27, 2010, from http://www.iii.org/Articles/What-is-in-a-standard-homeowners-insurance-policy.html

2 Federal Emergency Management Agency. (January 26, 2007). The Importance of a Home Inventory. Retrieved February 3, 2010, from http://www.fema.gov/news/newsrelease.fema?id=33513

3 Federal Emergency Management Agency. (March 16, 2006). FEMA and Local Officials Stress the Importance of Home Inventory. Retrieved February 3, 2010, from http://www.fema.gov/news/newsrelease.fema?id=24260

4 iinc. (2010). The Importance of a Home Inventory. Retrieved February 3, 2010, from http://www.iinc.org/articles/36/1/The-Importance-of-a-Home-Inventory/Page1.html