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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.)?

Also,

  • 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?)
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There are software programs out there to do an inventory, but I haven't used them. My wife works for an insurance company, and they have forms and specific documentation for your valuable things. You certainly know what your big ticket items are.

For myself, I simply use my video camera and walk around the house as if I was taking a walking tour. On the way I describe what is in each cupboard and chat about it. If I have any idea of what it cost I say so, otherwise I don't

Then I upload the video to a website I own for safe keeping. (I have never looked at the videos a second time or told my insurance company about them.) I don't really have much in the way of expensive items. Mostly I take a video of my computers, electronics and my wife's jewelry box.

The big point is to get an idea of what is in each room if my house burns down. The video is supposed to make it easy for me to review and remember should a tragedy happen and I need to justify costs to my insurance company.

From my understanding, they will replace the value of the contents of my home up to a certainly value, regardless of what it is. So I just want a quick list.

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It all boils down to this: If you don't have a record of what you own before a fire happens, you can't get it after the fire happens.

The more records you have, the better. Proof of sales price. Proof of authenticity. Condition. Quantity. If you have to prove value, you'll be glad you have the records.

It makes sense also to see what kind of things are not covered. Is art covered? How about coins or jewelry? A stamp collection? Antiques? If replacing these kinds of things is important to you, then make sure you (a) have insurance for it, and (b) can demonstrate its value with your records (purchase receipt, appraisal, etc.)

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The advantage of pictures or video is that it is fast to get your records up to date. Pan a video camera over a bookshelf or CD rack, and you can later pause it and either say "200 paperbacks" or "40 PS4 games" or you can actually list out all the titles so you can go and replace things. Take a picture of your TV/VCR/DVD player/radio receiver and later you can determine the manufacturer and model # from the picture. (Or whatever expensive electronics you have that you treat as furniture and don't remember the technical details about.)

My house was broken into and robbed. The insurance people were not content with "we had a TV." They wanted to know the make and model. They didn't ask for proof, but they wanted to know the make and model. An inventory to this level of detail is insanely boring to create. Even if you write up a digital document and only update it with things you bought this year. Taking an hour to wander around your house recording video, which you could add narration to if you wanted, is much quicker. Should you suffer a loss you will then have to do the insanely boring work of producing the list, but you will have the video to use for that purpose. No loss, no writing up the inventory needed. And even if insurance doesn't want to know the exact titles you want to replace, or how tall the bookshelves in the living room were, you may want it, and the pictures or video will help with that.

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I would not do this personally for most house items, since I really view them as consumables. I am using household items until they wear out, not placing my money in an investment that needs to retain or return value.

If you have any investment-like items, or if the value represents a significant (you decide this) portion of your annual income or net worth, then track it with inventory and schedule it on an insurance policy.

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?)

For insurance, you need to start with the details of your homeowners policy. Often there will be a general blanket amount of what they will reimburse. If you have items over that amount, or need more coverage, you will need to schedule the items up-front with insurance. This way, the value of expensive items are known and agreed on by all parties before an event. It ensures a quick claim resolution, and it is the cleanest and easiest way to deal with the insurance company.

You need to talk to your agent about the unique aspects of your policy. You need to make sure the policy will cover your liabilities.

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