How to Take a Home Inventory for Insurance and Tax Purposes

We all think it will never happen to us:  a house fire, a hurricane, or some other calamity destroys our house and everything in it.  Of course, these disasters happen every day to people across the country; they aren’t uncommon.  All of us have homeowners insurance to pay for replacement items, but in the event of a disaster, could we prove to an insurance company that we actually owned all the items in our homes?  For most of us, the answer is no.   In the worst losses, it’s very hard to determine from the remains of the house the original quality of the items that were destroyed.  This makes a bad situation even worse.

A home inventory gives you the evidence you need to get fully reimbursed in a disaster.  Taking a home inventory is probably simpler and less time consuming than you think.  In the event of a catastrophe, an inventory can help you quickly and accurately characterize your possessions for your insurance company, ensuring you get fairly compensated for your loss.  There’s other reasons to take an inventory too.

Why Should I Take a Home Inventory?

An inventory is essential to protecting you from further damage in a distaster.  An inventory: 

• Ensures you have the right amount of total insurance coverage for your home’s possessions.
• Ensures you have specific coverages for special coverage items like jewelry, rugs, collections, and more.
• Provides a complete list of items that your insurance company should reimburse you for in a disaster.
• Gives you evidence for tax write-offs for casualty losses that aren’t covered by the insurance company.

What Items Should Be Included in a Home Inventory?

In an ideal world, you would include every item in your home in your inventory.  The more information you have about your stuff, the more likely you are to get fairly reimbursed in a disaster.  That said, it is impractical to keep an up-to-date inventory for every individual item in a house.   Here’s a few general guidelines:

• Focus on high value items first. Make sure you have all the details on these items recorded (at least a model number, purchase price, purchase date, and a picture of the item).
• For items that are similar in nature, like clothes and DVDs, record items together and simply note the quantity of the total.  Take a high-resolution photo of the items.

What’s the Best Way to Record the Information?

Keep it simple.  A home inventory should be useful to you in the event of an emergency, not cumbersome and hard to figure out.  You can list your items in detail in a typical word processing document, or better yet, a spreadsheet.  Either way, create a new section (or spreadsheet sheet) for each room in your house.   If you choose a spreadsheet, you should create columns for category, name, description, quantity, price paid, year purchased, picture name (with the name of the picture of the item), and total value (quantity times price).

You’ll also want to set up a root inventory directory for pictures, with subdirectories for each room of your house.  You’ll likely have 5-15 pictures for each room in the house.  If you choose a document format for your inventory, you can paste pictures directly into the document.  If you use a spreadsheet, you might choose instead to reference the picture name in the spreadsheet.  Either way is acceptable.

You could also consider taking a video of each room.  Videos can help you remember information better, or fill in the gaps where pictures are insufficient.  Videos cannot be faxed or e-mailed to people easily, however.  You should view a video as a back-up for pictures and recorded information since you may be working with an insurance adjuster over e-mail or fax, and they may not be used to working with video.

Where Should I Store my Home Inventory?

When your inventory is complete, you should archive the files and store them offsite.  The easiest way to do this is to e-mail the archive to yourself using an online service like Gmail.  You can also burn a CD of the inventory and store it at the house of a nearby family or friend.  Whatever you do, don’t store your only copy at home (for obvious reasons).

How to Avoid Getting Overwhelmed

If this is the first time you’ve considered a home inventory, it might seem downright overwhelming.  You have a whole house of stuff, it’s probably hard to decide where to start. If that’s your situation, start small.  Pick a single room to inventory.  Most rooms take about 1-2 hours to inventory.  If you inventory 1 room a week, the average single family house could be inventored in just over 2 months. 

What do you think?  Have you taken a home inventory?  What other tips can you offer to make a home inventory better?

Image by HAM Guy.