One personal finance project that a lot of people overlook is the household inventory. It’s one of those “once in a great while” tasks that’s easy to overlook and forget about, but it’s not very hard and it can pay huge dividends if you’re carrying homeowners’ or renters’ insurance and something goes wrong with your living quarters.
A household inventory is a documentation of every item in your home so that you have this in the event of a disaster, such as a robbery or a house fire. It usually consists of a list of the items and/or a videotaped walkthrough of your home which captures images of the items.
Such an inventory can be very useful when dealing with insurance companies, as it provides documentation of the items that you own, thus helping your case for an insurance settlement.
Eight steps for making your own household inventory
One can make an excellent household inventory in just a few hours on a weekend. I was able to do my own home in about two hours of steady effort. It’s not too hard at all – it just takes time. Here’s the game plan.
1. Get a video recorder. If you don’t own one already, borrow one from someone. A video recording is a great way to document all of the items in your home, even the ones you forget to list.
2. Get a laptop – or a very good note taker. When we documented our home, we found it easiest to take a laptop from room to room in our home to jot down all of the information. If you don’t have a laptop, designate someone to be a note taker (maybe yourself, if you’re doing it alone).
3. Do one room at a time. Go to each room in your home and document all of the significant items in it. It’s not necessary to document individual foodstuffs and individual toiletries, for example, but I’d document things down to silverware and plates – my rule of thumb is that if it’s worth more than $10 and easily replaceable, or if it’s not easily replaceable no matter what, it gets documented.
4. Record as much information as you can about each item. Make, model, serial number, purchase date, and so on are all good pieces of information to have, especially for larger items. For smaller items, just list what they are and make sure that some video is taken.
5. Be sure to videotape or photograph any personal valuables. Jewelry and family heirlooms fall into this area. These are items that are not easily described and are best noted with visual proof of their existence.
6. Store the list/video in a secure place not in your home. This is a perfect item for a safe deposit box at your bank, for example. Just make sure it’s not in your home, as this is an item you’ll only need if there’s significant damage to your home or to the property in it.
7. Update the list semi-regularly. There’s no need to do this monthly, but like keeping up with your home insurance policy, an annual updating of the list can be useful. You can tack addendums on the end of your earlier lists or videos if you wish, covering any new purchases you’ve made.
8. Make sure that everyone knows where the list is, including a person or two who doesn’t live in your home. That way, if a real disaster strikes and you’re incapacitated, others can retrieve the list and help with insurance issues while you’re recovering – or can help your survivors get the insurance settlement that they’re due.