How to Set Up Your Insurance

To protect our real estate investments, we all know that home insurance is necessary and you want to make sure that if you had a total loss of your home, your homeowner’s insurance policy would be enough to build the exact same house on the same lot.

You will want to make sure you have ‘replacement’ insurance so that you end up with new versions of all your possessions. Not all insurance policies have ‘replacement value’ as default coverage, so make sure you ask.

The usual options are ‘fair market’ or ‘cash value’. Those types of policies cover the ‘current value’ of the item – including ‘wear and tear’ and depreciation. This means that you have to prove that you actually had the article and the value of each item at the time of the loss.

How would you go about developing a list of everything you lost to give to the insurance company (usually required within 180 days)? We have used the Insurance Institute’s ‘Know Your Stuff” free online home inventory software and found it very helpful. Not only can you create your inventory online, update it later, but you can store it for free and you have access to it from anywhere.

Take pictures with your smart phone, enter the additional information about each item (copies of receipts, appraisals, serial numbers, make and model, etc.) and be very detailed. You can’t have too much information.

If you are taking pictures of china or your silverware, arrange them on a table so that all the pieces are showing. Open cupboard and closets and take pictures. How much would it cost to replace all the items in drawers in the kitchen or the tools in the garage? Clothing, linens and everyday household items plus pictures of your landscaping, should be included along with furniture, outdoor living items, and electronics.

Some items do need appraisals such as collectibles, coins, rare books, and jewelry. There may be other items as well so check with your insurance agent. Also ask your agent if these items or any other of your belongings need an insurance rider for them to be covered.

Remember:

Check your current insurance policy to see which kind of insurance you have.

Call your insurance once a year to verify that you have enough insurance and let them know about any improvements you may have made to the home or expensive items you may have purchased.

Complete your inventory and store away from your home (online, send to a friend or family member, etc.)

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