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Taking inventory. You know that businesses do it at least once a year, just to see where they stand. But should you also take inventory of your possessions, in case you suffer a loss?
It might not be a bad idea, experts say. If you take a personal inventory, you will be better able to judge how much insurance coverage you need on your belongings. And if disaster strikes, you will be better able to substantiate your insurance claim and/or any loss you claim on your tax return.
This does not mean that you need to count every old castoff dish your mom gave you when you got your first apartment, or that pile of paperbacks or your T-shirts from the Grateful Dead tour. You can restrict your inventory to items that have actual (monetary) value.
Start with big-ticket things like jewelry, the good silver, furs, artwork, expensive furniture and rugs, cars, boats, your big-screen TV, computers, other electronics, expensive kitchenware and the like. But don’t forget to include items that might not be individually expensive but would be costly to replace, like your CD collection or your wardrobe. Go through your home room by room and make a list of everything that you would need to buy again if it were lost in a fire or other disaster.
Write all these things down. You can simply use a notebook, of course. If you want to be a little more high-tech – and maybe a little more organized -- the Insurance Information Institute offers free software to help you with this inventory. Your own insurer also may have some booklets or forms.
It might also make sense to take photographs or videotapes, either of individual rooms in your home or of individual items – or both. Gather as much documentation as possible on the more valuable items. If you have receipts, file them with your inventory. In the case of antiques or heirlooms, at least write down a detailed description of the items so that you can figure out later how much they are worth. Better yet, get them appraised now and put the appraisal with your other inventory papers.
Once you have completed your inventory, check your insurance policy to make sure the limits you have are high enough to cover your losses. If you are concerned that they are not, talk to your insurance agent. You may need to boost your overall limits or get special riders for some items.
Finally, be careful where you put your inventory materials. Don’t keep your only copy in a file cabinet in your house; after all, if your house burns down, you will lose all the information you need to make a claim. You can keep a copy at home for easy reference, but be sure to put another copy in a fireproof safe or a safe-deposit box at the bank, or give it to a friend or relative who does not live with you.