Inventory – if you’ve ever worked in retail, that word sends shudders down your spine. Thoughts of counting thousands of items in a grocery store immediately flash in my mind. Before I give you nightmares about counting everything, logging it all into massive spreadsheets or databases and measuring shrink rates (fancy phrase for, “the stuff that got stolen”), let me put your mind at ease. A Home Inventory is a formal, organized list of the valuable items in your home. A reader recently contacted us and asked our thoughts on doing a home inventory for insurance purposes. Today I want to tackle that request. I’ll address the following basics:
- What is the purpose of a home inventory?
- How detailed should you be?
- How should you perform the inventory?
- How often should you perform the inventory?
- Where should you keep the completed inventory?
Bad stuff happens every day. Homes are burglarized and trashed, burn down, flood, or are otherwise destroyed. Let’s say this happens to you tomorrow – how would you go about explaining to your insurance company (you do have homeowner’s insurance, RIGHT?!) what all they need to replace? They’re going to ask for an inventory of what was in the house. Hope you have proof of the heirlooms and other expensive stuff you had, because otherwise it’s gonna be tough to convince them to pay for your mint condition 1964 cat hairball collection.
Okay, okay. Maybe a cat hairball collection isn’t something you need to inventory, unless there really is a market for hairballs I’m unaware of. But I digress. What needs to go in the inventory? Well…pretty much anything of value. The Insurance Information Institute has a pretty decent guide on doing a home inventory which will give you a good list of what should be inventoried. If you think it is valuable enough to tell your insurance company they need to replace it, you should probably inventory it. How detailed should you be? Well, that’s going to be up to you and how much stuff you have. I’m not going to inventory all my closet items, but I will indicate how many (roughly) shirts, pants, shoes, etc. are in there. However, if you’re one of those people who wear $3,000 shoes and $2,000 suits, you might ought to make a point to be more specific than me on your closet. Clear enough?
This is really a matter of preference and your comfort level with technology. State Farm has a free online tool. While our inventory is electronic, those methods aren’t my preference. My preference: low-tech video + Excel spreadsheet. Most of the people I know have access to a video camera, even if it is a smartphone. You can walk through your house, narrating as you go, and then provide appropriate details in an Excel spreadsheet (serial numbers or other special details). Since this is not for public showing, it doesn’t have to be fancy. Literally walk through your house, talk through the stuff you’re inventorying and then enter details (as necessary) on a spreadsheet. Save the video and copy of the spreadsheet on a USB drive or burned onto a CD/DVD and voila.
Anytime you have a major change in your living situation, such as a move, a remodel, the purchase of new appliances, etc., you should update your inventory. Buying some new t-shirts or changing your shower curtain don’t qualify. Adding a new bathroom or replacing your kitchen countertops would definitely qualify. Use some common sense and ask the question – “will my insurance company ask for proof of this purchase to pay me for it if my home is destroyed?” Don’t overcomplicate. For most of us, once you’ve done your inventory, you can file it away for a few years without worry.
Stacy and I have encouraged you for a long time now to put together a love drawer. In it, you keep all your important paperwork in the event something happens and you need your spouse/parent/child to find it. Your home inventory can go in this same place. If you’ve not read that post, keep in mind there should be copies of these documents in multiple locations, and at least one or two of them NOT at your house. Wherever you trust your Will, Life Insurance Policy info, etc. to be safely kept, your home inventory should be safe there too.
I guess that about sums it up! If you haven’t already, you need to do a home inventory. While I don’t wish bad stuff on any of you, I do want you to be prepared if it ever happens.
Since I don’t work for an insurance company and deal with this every day, I’m sure there are some details you guys could add. What did I leave out?