How to build a home inventory for insurance claims

A contents claim is a list. After a fire, a flood or a burglary the adjuster asks for every item lost, what it was, when it was bought, what it cost and what it would cost to replace, and the carrier pays against that list, up to the policy's contents limit and subject to its sublimits and its valuation basis. A household with no inventory writes the list from memory, in the worst week of the year, and leaves off the things it cannot remember. A household with one hands over a file and argues about very little.

The inventory also does something before any loss: it tells you whether the contents limit on the policy is right and which items sit above a sublimit and need to be scheduled. This guide is the method, in the order that gets it done rather than the order that makes it perfect. A rough inventory that exists is worth more than a thorough one that was never finished.

What to gather first

Fifteen minutes of preparation makes the rest go faster.

• A phone with a camera and enough storage, or a camera and a laptop.
• A place to put the file that is not in the house: a cloud folder, an email to yourself, a drive kept at work or with a relative.
• Receipts, appraisals, warranty cards and manuals you already have, gathered into one pile so they can be photographed alongside the items.
• The current declarations page, so you know the contents limit, the valuation basis and the sublimits on the policy you are checking against.
• A simple spreadsheet or the carrier's inventory app, if it offers one, with columns for room, item, brand and model, serial number, purchase date, cost, and where the receipt is.

Step one: walk the house on video

Before any list, walk every room with the phone recording video and narrate as you go: the room, what is in it, and anything notable about it. Open closets, drawers, cabinets and the garage. Film the inside of the refrigerator and the pantry, the tool wall, the linen cupboard, the bookshelf spines, the contents of the medicine cabinet, the jewellery box open. Film the outside too: patio furniture, the grill, bicycles, the shed and what is in it. Twenty minutes of video establishes the existence of hundreds of items that will never make it onto any list, and adjusters accept it as evidence.

Upload the video to the off-site location that day. A video on a phone that burns with the house, or that is stolen in the burglary, is not an inventory.

Step two: list the items worth listing

Not every item needs a line. The video covers the ordinary contents of a room. The list is for anything that is expensive on its own, that the policy caps with a sublimit, or that an adjuster will ask about specifically: electronics, appliances, furniture above a modest value, tools, sporting goods, musical instruments, cameras, jewellery, watches, firearms, art, collections, designer clothing and handbags. For each, photograph the item, the brand and model label, the serial number where there is one, and the receipt if you have it, and enter a line in the spreadsheet.

Work room by room and do not stop to hunt for a missing receipt; note where it might be and move on. Purchase price is useful but replacement cost is what the policy pays under a replacement cost form, so a rough current price from a retailer's website is more useful than an exact price from years ago. For items bought second-hand, inherited or received as gifts, a description and a photograph are enough; an adjuster does not expect a receipt for a grandmother's ring, but does expect an appraisal if it is worth scheduling.

Step three: check the list against the policy

Add up the replacement cost column and compare it with the contents limit on the declarations page. Contents limits are often set as a fraction of the dwelling limit by default, and a household with a lot of tools, electronics or furniture can exceed it without noticing. If the total is close to or above the limit, the limit needs raising; the premium difference is usually small compared to the gap.

Then look at the sublimits. Standard homeowner and renters forms cap theft of jewellery, watches and furs at a low figure, and cap silverware, firearms, cash, business property and sometimes electronics and collectibles separately. Any single item or category above its sublimit should be scheduled on a personal property endorsement, which insures it at an appraised or agreed value, removes the deductible for a loss to it, and covers accidental loss and mysterious disappearance that the base policy does not. An engagement ring, a good watch, a camera kit and a set of golf clubs are the usual candidates. Appraisals for scheduled jewellery should be recent and from an independent appraiser; a retailer's sales invoice is accepted by some carriers and not others.

Finally check the valuation basis. A policy that pays actual cash value on contents deducts depreciation from every line on the list; replacement cost on contents is an endorsement on many policies and is the single setting that most changes what a contents claim pays.

Step four: store it, and keep it current

Keep the video, the photographs, the spreadsheet and the scanned receipts together in the off-site location, with a copy on a drive somewhere other than the house. Send a copy of the spreadsheet and the appraisals to your agent, who will hold it on file and will not need to ask for it after a loss. A paper copy in a fireproof box is a reasonable third copy but should not be the only one; fireproof boxes protect paper from heat for a limited period and do nothing in a burglary.

Update it when something worth listing arrives: a new television, a bicycle, a tool set, a piece of jewellery. The easiest habit is to photograph the item and the receipt on the day of purchase and drop both into the folder. Once a year, at the policy renewal, re-walk the house on video, because the ordinary contents change more than anyone notices and the annual video also captures renovations, new flooring and new appliances that affect the dwelling side of a claim.

Common mistakes

These are the reasons inventories fail at the claim.

• Keeping the only copy in the house, on the computer that was stolen or the drive that burned.
• Listing purchase prices from years ago and treating the total as replacement cost, which understates the limit needed.
• Skipping the garage, the shed, the attic and the storage unit, where tools, sporting goods and holiday decorations add up.
• Forgetting that items away from home, in a college dorm, a storage unit or a car, are covered at a reduced sublimit under most forms.
• Scheduling jewellery on an appraisal that is a decade old; the agreed value is the appraisal figure, whatever the item is worth today.
• Building the inventory and never telling the carrier what it found; the limit and the schedule only change if someone asks.
• Starting with the perfect spreadsheet and never finishing the video. Do the video first.

A worked example

Suppose a couple in a Las Vegas townhouse has a policy with a $150,000 contents limit, a $2,500 sublimit for theft of jewellery, and actual cash value on contents. They walk the house on video in an afternoon and list the larger items in a spreadsheet: $12,000 of electronics, $9,000 of furniture, $6,000 of tools and bicycles, $4,000 of cameras, and a ring appraised at $8,000. The replacement total for everything, including the ordinary contents estimated room by room, comes to $130,000, so the limit holds. The ring sits above the theft sublimit and is scheduled for $8,000 at a small annual cost. They add replacement cost on contents, which raises the premium modestly. A year later a burglary takes the electronics, the cameras and the ring. The scheduled ring is paid in full without a deductible; the electronics and cameras are paid at replacement cost against the photographs and serial numbers in the file, less the policy deductible. Under the old policy the ring would have paid $2,500 and the electronics would have paid a depreciated figure. All numbers are hypothetical.

How to use this

Once the spreadsheet and the appraisals exist, send them to us with the declarations page and we check the contents limit, the sublimits and the valuation basis against them, schedule the items that need it, and hold the file for the day you need it. If the inventory shows the existing limit is adequate and nothing sits above a sublimit, the finding is that the policy is right as it stands, and the afternoon was still well spent.