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Estimating home insurance with a home inventory

Fact-checked with HomeInsurance.com

If you’re in the market for home insurance, you might wonder how much coverage you need. The best way to start is by making a home inventory.

Creating a home inventory may seem overwhelming, but it’s worth your time. Having a home inventory ensures you have adequate insurance coverage and makes the claims process easier if your belongings get damaged or destroyed.

What is a home inventory list?

A home inventory list is a catalog of all your belongings. It should include items in your house, yard, garage, car and office. A home inventory should include your family members or roommates own.

You can create a home inventory in several ways. Many homeowners choose to catalog their belongings by room or type of item to keep everything organized and easily add new items.

After you make a list of the items, include details about each one to help your insurance company calculate your payout after a loss. You should include information such as:

  • A written description of the item
  • A photo of the item
  • The product’s make, model and serial number if applicable
  • The original cost
  • The place and date of purchase
  • The receipt, if you have it
  • Warranty information

A home inventory has several uses. If your belongings get damaged or destroyed by a covered peril, the insurance company knows which items were affected and how much it needs to reimburse you to replace them. 

A home inventory also has tax implications. If you have to file an insurance claim, you can claim the losses on your income tax return. With a home inventory, it’s much easier to prove the total value of the lost items when you file your taxes.

How to make a home inventory list

A home inventory is all about organization, so find a system that works for you. Many people work room by room to ensure that everything is accounted for and recorded. 

To get started, walk through your home and take a video of every room, showing all the items you can. Capture all sides of the room, open drawers and look inside cabinets. If you have large items, like an appliance, record the serial number or make and model information. For bigger spaces, like a closet, there’s no need to video every item.

The video won’t be the most helpful thing during the claims process, but you can include it in your proof of loss documents. Instead of looking through every room individually, you can start documenting your belongings by referring to the video, then check for anything you missed.

You can use a mobile app to make a home inventory. Your insurance company may offer an app or a digital worksheet to help you record your items accurately. If not, search your app store for free tools that have good ratings. If you don’t want to use an app, you can create an online document. It’s best to do something online so you can access the list wherever you are if your items are damaged. 

Once you’ve finalized your home inventory, keep the document safe. Store a hard copy somewhere outside your home, or upload the file to the cloud. 

How to estimate home insurance

Before you purchase home insurance, you need to know how much coverage to get. Your home inventory can help you determine your personal property coverage amount, but what about dwelling and liability coverage? Here are some of the considerations homeowners should take into account when estimating home insurance costs.

Your home’s replacement cost

Your home’s replacement cost is the amount of money you would have to pay to rebuild your home at the current market value. Purchase enough dwelling coverage to match the replacement cost.

To determine your home’s replacement cost, take the average cost per square foot of a home in your neighborhood and multiply it by your home’s square footage. Figure out how much it would cost to install a new roof, floors and interior fixtures. Add those figures together to get the replacement cost. 

The value of your personal belongings

When you have a home inventory, it’s easy to determine how much personal property coverage you need. According to the Insurance Information Institute, home insurance policies usually provide coverage for your items at 50-70% of your dwelling coverage.

So if your dwelling coverage was $300,000, you might get $210,000 in personal property coverage, at a rate of 70%. If the value of your personal items totaled $200,000, you would have plenty of coverage. But if your items totaled $300,000, you would want to consider purchasing additional coverage.

Your at-risk assets

Liability insurance covers your legal fees if you accidentally damage someone’s property or someone injures themselves on your property and they take you to court. The amount of personal liability coverage you need should be based on the cost of your at-risk assets, like vehicles, investments, retirement accounts, home equity and investment real estate.

You can expect most home insurance policies to have a minimum of $100,000 in liability coverage, but you might need significantly more. Insurance companies generally recommend that homeowners have between $300,000 to $500,000 worth of liability coverage for the most protection. 

The takeaway

  • A home inventory is a catalog of all the personal items you own.
  • A home inventory makes the claims process easier and helps you prove losses on your income tax return.
  • Creating a home inventory can be time-consuming, so look for a mobile app or digital tools to help you stay organized.
  • Once you complete the home inventory, keep a digital copy in the cloud or a physical copy outside your home for safekeeping.
  • You can use your home inventory to determine how much personal property coverage you need when it comes time to purchase home insurance.

Creating a home inventory is an easy way to determine how much personal property coverage you need. The process of making an inventory can feel overwhelming, but it’s worth your time. 

To make an inventory, work room by room and list every item you own with a description of the make and model, original price, date and place it was purchased, and serial number. It also helps to take photos and videos, especially of larger items. Add up the total value of your items, and use that amount to determine how much personal property coverage you need.

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