How to Do a Home Inventory for Insurance Purposes
August 26, 2022
Home insurance policies or renter’s insurance provide many benefits that make them worth the expense. However, it’s not just about the money—it’s also about safety and security. If you have a thorough home inventory, you can get reimbursed for any items damaged or destroyed during a disaster, such as a fire or a flood.
When you have an extensive list of all your belongings, you will be able to prove exactly what was lost or damaged. This is crucial if you face disputes with your insurer or the person who caused damage to your property.
In this article, we discuss all you need to know about doing a home inventory for insurance purposes so that when disaster strikes, you remain protected.
What Is a Home Inventory?
A home inventory is a list of the possessions that you own. This simple list is essential for purchasing insurance and making a claim on your policy.
When you purchase insurance, your insurer will ask for a copy of your home inventory. This is how they know what items are covered by your policy and what aren’t.
When you make a claim on your policy, your insurance company will use the information from your home inventory to determine the value of the damaged or stolen items.
Why is a Home Inventory Important?
Did you know that a home inventory is an essential part of your insurance policy?
In nine surveys conducted by the Insurance Information Institute between 1995 and 2020, more than half of homeowners said they created an inventory to document losses for their insurers. In the 2020 Triple-I Consumer Poll, 43% of homeowners said they maintained a home inventory. According to this survey, Southern and Western residents were more likely than Northeasterners or Midwesterners (48% vs. 39%) to have created a home inventory.
Inventory is critical because if you need to file a claim with your insurance company, they will need proof that the items you are claiming were in your home when the incident occurred. Without documentation in the form of a thorough home inventory, you may not be able to proceed with the claim process.
An up-to-date, thorough home inventory can streamline the claim filing process. If you’ve ever tried to file a claim with your insurance company, you likely already know how frustrating it can be. You must be armed with everything the insurer will ask for, such as proof that the items were present in your home at the time of loss. This will be difficult if you don’t have an inventory.
What Are the Ancillary Benefits of a Home Inventory?
Whether you are a homeowner, renter, or short-term rental provider, there are many ancillary benefits to having a home inventory.
For example, if you are renting out a room or two on your property, it’s important to have an accurate, thorough inventory of all the furnishings your tenant will use. If something is damaged or missing after the rental period, you can outline the renter’s obligations.
You can also use an inventory to document the extent of the damage to your belongings. For example, if you inspect the property at the end of the lease and find stains on the couch cushions, you can refer to your home inventory to determine when the spill occurred. If the cushions were stained during the tenancy, the tenant is responsible for compensating you for the damage that has been done.
If you are generating income through short-term Airbnb rentals, home inventory is crucial to maintaining the integrity of your listing.
How to Create and Maintain a Home Inventory
There are three ways to create and maintain a home inventory: on paper, on your computer using a spreadsheet, and with a home inventory app. The method you use is ultimately up to your preferences and the resources you have on hand.
Maintaining records on your smartphone or computer is easier than ever in the digital age.
Before the widespread use of computers and smartphone apps, home inventories were done with a simple pen and paper. This method is still incredibly popular because it is easy and inexpensive. The downside is that it can be time-consuming and prone to human error.
With a paper inventory, you just have to write down every item in your home, such as furniture, electronics, clothing, decor items, and all other possessions. Include short descriptions of each, including its make, model, serial number, date of purchase, and purchase price. Photograph each item from different angles, so its condition is thoroughly documented.
If you do your home inventory on paper, there is no easy way to track all of your possessions. Even with meticulously arranged file folders and organization systems, you will likely need several minutes to track down specific items.
Spreadsheets are significantly more efficient than maintaining a physical home inventory on paper, but they are still not the best option.
Spreadsheets can be overwhelming when you lay out everything you own, and it can become complicated once you divide all your items into different categories. For maximum efficiency, you need a great deal of knowledge about computer programs like Excel or Google Sheets.
But with a digital inventory, it will be much easier to find the information you need with just a few taps on your keyboard.
Home Inventory App
Nest Egg is a home inventory app that makes recording and tracking items a breeze. The Lite version is free, and you can use it to keep track of up to 25 items. With the paid version, you can track unlimited items for a one-time purchase.
With Nest Egg, all you need to do is take photos of your belongings and add them into categories (like Kitchen or Bedroom), so they’re easy to find later on. You can also take pictures of receipts or other related documents, like warranties or bills. This way, when something goes missing or breaks down, you can access all critical information in the app before you file a claim.
You can also share your inventory with family members, so everyone knows what’s where in case of an emergency or just so no one forgets about their most expensive pair of shoes!
Tips for Starting a Home Inventory
Creating a home inventory can be very challenging if you don’t know where to start. Here are a few things to put you on the right track:
Start With the Basics
Start small and work your way up. Begin with the most valuable items in your home, such as jewelry, electronics, and major appliances. From there, expand to clothing and shoes.
You can also include items that are sentimental or important to you but not necessarily worth a lot of money, such as family heirlooms.
Take Photos of Major Appliances
If you have many big appliances, such as a washer, dryer, oven/stove combo, refrigerator, freezer, and more, take photos that clearly indicate their current condition. This way, if they are stolen or damaged in some way, you can clearly show your insurer what they looked like before the accident occurred.
List Your Recent Purchases
One of the most important steps in creating a home inventory for insurance purposes is to maintain it consistently. You must list your recent purchases—everything from appliances and furniture to clothes, tools, and electronics.
When you make a list of recent purchases, include the following:
- Date purchased
- Description of item
- Where the item was purchased from
- Purchase price (include receipts if possible)
You should include any other information that might be relevant, such as unique features of the item or whether it was customized in some way.
Count Your Clothing by Category
When preparing for a home inventory, take the time to count your clothing by category. It may seem tedious and unnecessary, but this will help you determine how much money you could potentially lose in case of theft or damage.
First, go through all of your clothing and sort them into categories: tops, bottoms, shoes, and accessories. Note whether or not they were purchased new or used. Then, add up how many items you have in each category and note their value (or estimate their value if you no longer remember the exact price).
Next, calculate the total amount spent in each category to see how much money was spent on each type of clothing. This will give you valuable insight into what category you should prioritize for protection against theft or damage. You should also note which types of clothing are more vulnerable to wear-and-tear due to frequent use (such as shoes).
If you own any luxury items, such as expensive jewelry, fur coats, or designer clothing, get them appraised and insured against loss. This will protect your finances and ease the burden of proof if you need to file a claim.
Keep Track of Off-Site Belongings
If you own a storage unit, you must also maintain a list of the items in it and their condition. And if you have any valuables that are not stored at your house, such as a boat or recreational vehicle, you must also document their current condition so they can be included in your insurance plan.
Things to Include in Your Home Inventory List
Your home inventory list should include a description of each item, its value, and its location. You must also document important details such as serial numbers and other identifying information that is available for your valuables.
Here are the things you should include in each listing when doing a home inventory:
- Item description
- Make, model, and serial number (whichever is available)
- Appraisal or purchase price
- Origin of the item (where you bought it)
- Date of acquisition (when you bought it)
- Receipts of purchase
- Clear photos of the item from multiple angles to clearly show its condition
- Estimated cost to replace at the time of writing
Photos vs. Videos: Which is Better for Your Home Inventory
Taking pictures of all the items in your home is a good practice and can serve as a starting point for creating a household inventory. Take photos of entire rooms, specific areas, drawers, closets—anything you consider important or valuable.
If you have items with model names or serial numbers, take photos and add them to your home inventory list.
You can also take a video of your entire property for an overview of all of your belongings. This will help you get coverage until you have time to prepare a more formal application.
Having photos and videos to go along with an insurance claim will help expedite the process and maximize your return.
Keep Your Home Inventory Safe and Accessible
Keep your home inventory secure at all times. If you created a list on paper, make sure it is locked in a safe or fireproof box and make multiple copies of the list for safekeeping. If your list is in a spreadsheet, keep it on a password-protected physical drive and upload a locked online version that you can easily access.
With an app like Nest Egg, your inventory list is or can be stored in the cloud, which means you can access it from anywhere. This is especially useful if you lose your device or you are away from home when an accident or a burglary occurs.
Here are a few things to keep in mind:
- Read and understand your inventory tool’s privacy settings
- Ensure that your information is kept private
- Don’t put your home address in your home inventory list—this could put you in a vulnerable position should someone hack into your list
- Include your insurance policy number and claims phone number on the inventory list, so you have these details to hand should you need them
- To cover all your bases, give all adult family members access to your home’s inventory records
The Bottom Line
To create a home inventory for insurance purposes, you need to take your time and be as thorough as possible. It’s all about ensuring you have all the information you need in case you need to make a claim with your insurance.
Nest Egg is a top-notch home inventory app that saves a ton of time and effort on data entry, organization, and overall management. Download it today!
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