Many people don't think they have a lot of value in their personal property. Sure, there's the big-screen TV, laptop or tablet computer, and maybe the home theater system, but the rest is just clothes, furniture, tools, dishes, and stuff. Most of it will probably end up in the garbage or at a garage sale.
However, what we as insurance agents learn is that after a loss (when policyholders compile a list of their damaged and destroyed property and what it would take to replace it) they often find the cost stunning. We don't want you to discover that you were underinsured, especially when it's too late. For additional guidance on valuing belongings, see Understanding Personal Property Value and Insurance.
The reasons for this miscalculation might come down to the fact that most of us acquire our personal items gradually, a little bit here and a little bit there. In contrast, the items we know to be valuable are usually those whose purchase hits us at one time -- the big-ticket television or computer, for example. Add up all those "little" expenditures and the chances are that your possessions are worth a lot more than you think.
What to do? Sit down and run a "mock loss" drill with your family. First, write down what you estimate your personal property to be worth. Now imagine that everything you own has been destroyed -- and you just happen to have a complete inventory and picture or video of every single item (this should be easy to do because you can walk through the house and see everything).
Once you have your "lost property" list, start adding up the values. If you're not sure, check store ads, catalogues, and Web sites. Be sure to count all those spoons and shirts, every blouse and toy, and each knick-knack and tool.
Some of them might be old. However, if you're counting on your insurance to replace them, calculate the value at what each item would cost today, if you had to drive a truck to the mall and replace everything at once. You may also want to review Understanding Personal Property Coverage for how replacement cost can affect your coverage needs.
Once you have your total, compare it with your original estimate. Shocked?
One Virginia couple estimated their property values to be approximately $100,000. After a total fire loss, they tallied their possessions. To quote the wife, "I stopped counting at $300,000." Their insurance coverage provided only $109,500.
Please talk to an agent with your total, and let's make sure your current insurance covers the real value of your possessions. Do it now, before you suffer a serious real loss!
Frequently Asked Questions
How do I create a home inventory?
Walk through each room and record items, take photos or video, and keep receipts or serial numbers when available.
Should I use replacement cost or actual cash value when totaling items?
Replacement cost estimates what it would cost to buy a new item today, while actual cash value factors in depreciation; decide based on the coverage you expect your policy to provide.
How often should I update my inventory?
Review and update your inventory at least once a year or after major purchases and donations.
What about high-value items like jewelry or artwork?
Document them carefully and consider separate scheduled coverage or appraisals for items that exceed standard policy limits.