By Team Tomorrow
Published March 31, 2021
Imagine for a moment that the unimaginable happened: Your house caught fire. Luckily, everyone got out in plenty of time, but the structure and everything in it burnt to the ground.
The firemen tell you how smart you were to get out when you did, and introduce you to a social worker from a local charity organization. She starts asking you if you have anywhere to sleep. Will you have enough money to spend on restaurants until you can find housing? You did lose access to an oven and a fridge, afterall.
And, oh, do you happen to have insurance?
If you do, you will never have been so grateful to your past self for seeking coverage. But in the following days, you’ll likely start to recognize big flaws in your insurance strategy. You paid premiums for all this coverage, but now that it’s time to file a claim, you realize you don’t have nearly enough information.
The insurance company wants to know what brands of clothing you bought, when you purchased each piece and its approximate value. They’ll want to know where you kept your guitar and if you have a receipt of purchase.
No matter what disaster or misfortune you encounter, having an inventory of your home’s belongings prior to the incident is a key and often-skipped step. Here’s how you can organize your valuables so you can maximize your insurance policy should you ever need to file a claim.
A list or register of your belongings is good. But taking detailed photographs of your home, or even walking around your home shooting a video, is better.
It’s easier to shoot a video than to make a long, written list. And it’s also more substantive proof of ownership for your insurance company when you file the claim. Make sure your video is detailed, noting estimated dates of purchase for your belongings – especially the valuable ones.
You’ll want to update these videos somewhat regularly. You wouldn’t want to do it once, spend years adding belongings to your home, and then not be able to claim them because you hadn’t been keeping track. You could make it a goal to update the video once per year, after every purchase of a new valuable item or any other interval which makes you feel comfortable.
It’s good that you have an inventory, whether it’s written or recorded. But what happens to your paper, written inventory if the house burns down? What happens to your video if your phone bites the dust?
It’s incredibly important to make sure you have a backup. The old advice was to put your video tape or written list in a safe deposit box, or keep additional copies with friends or relatives you trust who live in another home.
In this digital age, you can simply triple check that you’ve uploaded the video to your cloud storage provider of choice in a manner that keeps it completely private and protected. That way, your record should be available from any device with a simple login.
Just as you update your video or inventory log regularly, you’ll want to have your valuables appraised regularly, too. For example, during the 2008 recession, the prices of precious metals skyrocketed. If you lost your wedding ring during the recession and hadn’t had it appraised in years, your insurance company would likely pay out less than it was worth during the market drop as you wouldn’t have proof of its new appraisal value.
Some valuables gain and lose value depending on markets. Others, such as collectible items, may get progressively more valuable as time goes on. Make sure you’re seeking regular appraisals accordingly.
Your property could be covered under any number of insurance policies.
If you rent, you can take out a renters insurance policy. This policy usually covers liability in case someone gets hurt while visiting your home. It may also provide living expenses if you cannot use the property you were renting while it is being repaired. Renters insurance policies typically cover all of the property in your home and in your vehicle in case of fire, theft or other loss.
Renters insurance is very affordable. You can usually secure a policy for far less than $20 per month.
Homeowners insurance is a bit more expensive, which makes sense as it covers not only the property within your home, but the home itself. This policy also tends to cover certain liability concerns and living expenses if you cannot, for some covered reason, use your home for a period of time.
It wouldn’t be unreasonable to expect to pay $100 or more per month on premiums for this type of policy.
Many renters and homeowners policies will not cover your property in case of certain natural disasters. You’ll have to read the text of your policy to see which specific disasters are not covered. But flooding is almost always excluded.
For that reason, you can purchase a separate flood insurance policy. Unfortunately, this type of policy tends to cost more if you live in an area that floods more frequently. But if you live in an area where this is a higher risk, you will not want to go without coverage as the odds you’ll end up needing to file a claim can be significant.
Your homeowners or renters insurance policies will come with a max benefit. If you have any particularly high-value items in your home, it may be beneficial to also seek out a separate valuable personal property insurance policy.
If your item is worth under $10,000, it shouldn’t be too difficult to find a policy under $10 per month. As the value of covered items increases, so, too, will your premiums.
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