An answer to the question Spring cleaning for your finances? Is there any activity that should be done annually, with respect to your money? mentioned home inventory:
The Inventory is also very important. This is used in the event that you have a fire or some sort of disaster that requires you to give a statement of any items you had in your home. This is a very difficult thing to go through, and having this statement ready to hand over only makes thing easier. There are a couple ways to do this. Some people take pictures of everything they have in their house and make notes of prices and values, some people take a video of the whole house, and some people write down item by item on the computer or on a piece of paper. Whatever way you would like to do it is fine, what works for one person does not necessarily work for the other.
I'd like to know what the best or even "correct" way to take inventory actually is. Specifically:
- Are pictures necessary?
- How detailed do you get? Obviously if you set out to inventory every item worth $5 or more, you are never going to finish. But, those small items definitely add up in value, and if your home was destroyed, is any insurance allowance made for replacing those small things? Can you make an estimate in aggregate? (such as, $1000 in clothes)
- Do you need receipts? Detailed model numbers (for electronics, appliances, etc.)?
- If your home is destroyed and you have an inaccurate inventory or no inventory at all, what does insurance provide for replacement of property?
- Maybe more importantly, will insurance even care about your own personal inventory? (Isn't it easy to scam, through value inflation?)