July 13, 2016

Documenting your Personal Possessions for Homeowners Insurance

Recently I posted a short article on Wallethub about how to document your personal possessions.   For home insurance it is imperative that you do so.  Insure undocumented possessions at your own peril.  Please read this entire post Documenting your Personal Possessions for Homeowners Insurance for important details.

Lets be frank here, Insurance Companies realize that no one has a perfect set of documents for their personal possessions.  However that does not give you license to have no idea of what you have. Imagine yourself in a courtroom drama.  What evidence do you have to support your claim of ownership of a piece of personal property?

Insurance fraud is a multi billion dollar industry and it is on the rise.   How is an insurance company to really know that you truly owned many expensive items if you have no proof of ownership?  Also consider yourself after a large loss.   Will your memory be that good after a traumatic experience?

Set aside some time now, to both document your possessions and insure their proper coverage.   Please note that it is critical that you understand the limits of your current insurance policy for certain high value items.

Types of Evidence:

General Items:

There is no end to the types of evidence that you could have.  Receipts from the purchase.   Photos.  Appraisals.  Videos.  Diary accounts.  Lists.   Possibly Eye Witness Testimony maybe.  However, the best practice here is to be organized before disaster strikes.   Be careful not to just “claim” that you owned this and that.   You want to avoid, at all costs, artificial claims of ownership.

High Value Items:

For high value items, many insurance companies will not even write the insurance until you have proved both of their existence and had these items appraised.  When I say higher value I mean anything worth more than about $1,000.  However, this totally depends on  your insurance company.  (Speak with your agent concerning this.) These type items are normally written on either their own insurance policy or an endorsement to your home insurance.   Some affluent carriers are more lenient with this.

Evidence of Personal Property for the Claims process:

During the claims process, you will need to provide to the insurance company information about what was lost.  Wouldn’t it be great if you could hand them over a list complete with receipts and photos?  As the old phrase says an ounce of prevention is worth a pound of cure.   Now I realize that no list will be exactly up to date.  But won’t it be easier to start off with a list from three months ago and just have to add your last couple of months purchase to it?

Why is documentation Important?

Documenting your personal possessions is important in case you have to file an insurance claim with your home insurer.  Keeping evidence of your personal property is important for two main reasons.  One rather obvious and one overlooked and one almost never thought of.

“Insure undocumented possessions at your own peril.”

Reminding yourself what you own:

Believe it or not – one of the main reasons to document your possessions is to remind yourself and your spouse what you owned.   Yes, some items will be very easy to remember, such as the couch and the TV.   However the smaller detailed items such as the ornate magazine cover holders can easily be forgotten until five years later.   How about the long forgotten box in the closet.  You know the box that you cant remember what is in it, even when you are staring at it?   Think this through, by quickly detailing what is in each of these boxes, you are helping to protect your financial future.   Follow me through to the end here.  I am not suggesting that you write out a list of everything that is in that box.

Assisting in Calculating Personal Property Coverage Needed:

Sounds simple enough when you say it.  But I have never had a client tell me exactly how much personal property coverage that they needed in an exact dollar figure.  Most commonly prospects reference how much personal property insurance coverage they already have, rather than what they need.  Prospects that are getting either home or renters insurance for the first time – rarely – if ever have much of an opinion.

How to keep track of your stuff:

There are programs and such that I have seen given away and sold online for keeping household evidence of personal property.  However, I have seen nothing that can beat the combination: Excel Spreadsheet, Photos, Videos, and Scanned Receipts all backed up on a memory stick AND onto the cloud.  This system, if fully implemented will beat any system I have seen.  If only partially implemented this will be better than nothing.  To complete my full plan you will need at the least: an Iphone or Android smartphone, an inexpensive stick drive, a computer, either a safe deposit box or a home safe, and a cloud backup program.  Lets go through the details of how to do this:

1.  Start out with an Excel Spreadsheet.  Start off by password protecting the file.  Walk around your house and notate an estimated purchase price, a purchase date, name of each item in your home that is worth more than about $500.  If you do not know the date, just put the year or your best guess.  Obviously the purchase price probably is not the current value of it.   Think about any items that you may own that are stored off site.  Such as a storage facility.  Know that the off site items may not not covered by your home insurance.  Check with your insurance agent about this.  Now take this completed list and contact your insurance agent to review it with them.   Ask with them what coverages you have for all of these items.  You may discover that some of the items that you possess are currently not covered by your home insurance at all.  You may or may not decide to add a valuable policy for certain items.
2. Take photos, with your iphone or such of all of these items.   Ideally you will do this with a device that automatically uploads these pictures to your computer.  However, really any digital camera will work after you download them to your computer.  Save these photos onto a file named “Family Personal Property.”   Add the Excel Spreadsheet to this file.
3.  Over time locate all of the physical receipts that you have and place them in one place.    We are not interested in consumable receipts – such as paper towels, and we are not interested in service receipts for dinners out.  Just Personal Property items that contain value.   Please scan the high costing receipts into one big file.   Add this to the file on your computer.  Ultimately, if would be nice to have all the receipts from stores scanned, but that might be a bit much.
4.   Go into the email that you use for personal use.  Open up a new subfile, mark it Receipts.  Start either copying or moving all of the electronic receipts that you have and get to this file.  Personally at this stage, whether something is a consumable receipt or not, probably does not matter.   Just put all receipts in one file.    As with all emails systems, please confirm that this system is backed up to the cloud.  If you are using a service such as AOL, Yahoo, etc – it likely is only on the cloud.
5.  Now its time to break out the video camera or iphone/android.  This is a great great task for tweenagers.   Start on the outside of your house and slowly and deliberately film everything you own.  Take time to look up and down.   Go very slowly focusing in on individual items.  Next go into your garage and then into your home room by room.  Open closets, drawers, etc.  As the saying goes, leave no stone un-turned.  If you have a basement or an attic, film those areas as well.  This is likely to be a large file when completed.  When done download this video to your “Personal Property” file.
6. Go into your file and confirm that the pictures are there and confirm that the video footage was actually taken.
7. Add your Home Insurance Declarations page and or policy to the file.
8.  Backup this entire file on a stick drive. Use password protection on the drive.  Place the stick drive either in a safe deposit at a bank or in a fireproof box, preferably off site which means that the safe deposit box is probably preferred.
9.  Back up this file to a collocated cloud storage company.  Use passwords whenever possible.  Passwords on the file, passwords on the documents.
10.  Update this information every couple of years.  Add reminders to your calendar to do this.

You may find after doing this exercise that you either have too much personal property insurance or too little.   The point of this blog/ article is not meant to discuss valuation methods, however, it is important to realize that certain personal property coverage may be provided under a Replacement Cost Method and sometimes it will be covered under the Actual Cash Value Method.

Methods of Insurance Valuation for Personal Property:

The Actual Cash Value method is the lesser of the two options.  Sometimes, such as with NFIP Flood Insurance, it is your only choice.  Actual Cash Value values your stuff at what it is really worth.  A T Shirt your purchased for $20 two years ago may only now be worth say $5.   The better of the two options is Replacement Cost.   Replacement Cost coverage is the cost to go and buy a replacement.   As discussed previously, anything worth more than $500-$1,000 and up, may need Special Valuables Coverage.

If you do indeed find yourself having too much or too little coverage, contact your insurance broker.  Speak it through with them.

A Special Note on Trusts:

Were you aware that your trust should (more than likely) be listed on your homeowners insurance?  If you do not have a trust, this will not pertain to you.  However if you have a trust that a lawyer drew up for you, a somewhat standard revocable trust for estate planning purposes, you will want to both ask your lawyer and check in with your insurance broker about this.   Why does this pertain to personal property.   The complexities of this discussion are many, and certainly not a settled state.  However, if your trust owns some of your possessions, it is ‘possible’ to find yourself with not as much insurance as you think you have.   There are different ways to accomplish this task on your home insurance policy.  None of them are perfect, in my opinion.    There are other reasons as well, other than the ownership of personal properties to list your trust on your home insurance documentation.

Thank You:

Thank you for reading Documenting your Personal Possessions for Homeowners Insurance.  I hope you found the blog post useful.   If you found it to be particularly useful, consider sharing on social media or emailing to a friend.  Please be mindful that insurance is different in each and every jurisdiction. Some rules and regulations change.  Your insurance is not likely to be the exact same as discussed here.  Speak with your insurance broker whenever considering purchasing or changing any insurance.  Reading about insurance on the internet is not a suitable replacement for speaking with a licensed broker in your state.   Please read our disclosures.  Call or email with any questions.

References for Documenting your Personal Possessions for Homeowners Insurance:

Reference Points for Documenting your Personal Possessions for Homeowners Insurance:

California Department of Insurance Home Inventory Guide (Revised) – Dave Jones California Insurance Commissioner.

New York Times article “A Guide to Insuring your Personal Belongings.”

About Marindependent Insurance Services LLC:

Marindependent is a independent California Insurance Broker.  We are licensed solely in the state of California within the United States.

Marindependent Insurance Services LLC – California License 0K10734.

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