How can you boost the payout from a home insurance claim?
Losing items in a home fire, burglary, or other catastrophe is traumatizing, not to mention costly. That’s why we suggest homeowners insurance replacement-cost coverage: It compensates you for the actual cost to replace your home’s contents—up to your policy limits—not for their depreciated value. But even with such coverage, you won’t be completely compensated for items you can’t document.
Pam Johnson, a property field adjustor with USAA Property and Casualty Insurance Group, says that though she uses effective techniques to jog clients’ memories after a loss, a home inventory prepared in advance is best. “You’re often going to have a better settlement if you can document everything,” she said.
Creating an inventory sounds tedious. So Consumer Reports Money Adviser took on the subjective task of comparing the time needed to write down the contents of a 2,400-square foot home and then video the home’s contents with creating an inventory from memory. Besides comparing the time taken and the monetary value of both inventories, she also estimated much higher a settlement would be if it were based on an advance inventory.
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Step 1. Over several weeks, the tester took her laptop to away-from-home locations and entered in a Word document everything she could recall in each room, cabinets, and storage space. She found it hard to remember out-of-season clothes, the contents of drawers, and the names of books and music CDs. She remembered nothing from the attic. She also struggled, in some cases, to describe items in words, and to remember dimensions, not to mention prices paid and dates of purchase.
TIME: about 22 hours.
Step 2. Our tester returned home and used her iPhone to take videos and photos of the rooms and their contents. She opened cabinets, closets, and drawers, and removed items, describing as much as she could. Although she’d estimated her bookshelves held 40 hardbacks and 180 paperbacks, she found 138 hardbacks and 424 paperbacks. The tester took note of items she’d missed in her original inventory. She also photographed paper receipts to record the value of her purchases.
TIME: about 13 hours.
Step 3. Using eBay, Amazon, and other online sources, the tester did a rough estimate of the cost to replace the items she’d missed in the first inventory. They included silver items, framed paintings, autographed sports memorabilia, lamps, small collectible items, clothing, and sporting goods.
TIME: about 7 hours. (Our tester didn’t include this in her time comparison because it’s not something a homeowner would usually do.)
Total estimated minimum value of missed items: $11,700.
Step 4. The tester wanted to store what she’d recorded in a safe place. She found that Know Your Stuff, an online program provided by the Insurance Information Institute to help homeowners upload their home inventories, was clunky in handling her videos. So she uploaded them to the storage site Dropbox.com.
TIME: about 4 hours.
Total time for memory-based inventory: about 22 hours. Total time for video-based inventory: about 17 hours.
Creating the home inventory not only took less time—about 17 hours vs. about 22 hours—but also would have provided a potentially larger claim payment from the insurer in the event of a total loss.
Potential increase in insurance payout: $11,700, minimum.
This article also appeared in the October 2014 issue of Consumer Reports Money Adviser.
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