When disaster strikes, whether a tornado, fire, burglary, or other insurance-covered peril, homeowners and renters often find themselves overwhelmed by the loss and the claims process. One critical step an insured can take to prepare for such situations is to create a comprehensive home inventory.

After a covered peril occurs, an insurance company may require policyholders to provide proof of ownership and value for lost or damaged items. Insureds may struggle to recall every item they own, leading to incomplete claims and potential financial losses. A home inventory is a detailed list of personal belongings with descriptions, receipts, purchase dates, photographs, appraisals, and estimated values.

To create an inventory, go room by room and list your belongings with photos, receipts or estimated worth, and descriptions including the make, model, and serial numbers. Always store your inventory in a safe place not in your residence, like a safety deposit box or in the cloud. The National Association of Insurance Commissioners (NAIC) has a home inventory app that can help with the documentation process by allowing you to take pictures and scan barcodes of items.

An inventory allows claimants to submit accurate and detailed reports, ensuring they receive the actual or replacement cost compensation they are entitled to under their policy. Actual cash value is paid after depreciating for age and wear and tear. Replacement cost means reimbursement for the cost to repair or replace with a similar item. With replacement cost, the depreciated amount is paid first, and once proof is provided for the repair or replacement the company will reimburse the cost.

Insurance policies cover personal property up to the limit on your declarations page. In the absence of a home inventory, insurers may default to estimating the value of lost items, often leading to underpayment. By having an organized record, policyholders can provide concrete evidence, increasing the likelihood of receiving the full replacement cost for their belongings.

In the case of burglary, a home inventory is a valuable tool for insurance claims and law enforcement investigations. Many homeowners and renters underestimate the value of their possessions, leading to insufficient insurance coverage. A home inventory helps individuals assess whether their current policy limits are adequate to replace their belongings. If the total value of possessions exceeds the policy’s coverage limit, policyholders can make informed decisions about adjusting their coverage before a loss occurs. This proactive approach prevents the unpleasant surprise of being underinsured when it is too late to make changes. Speak to your licensed insurance agent annually about policy limits and if they need to be adjusted.

A home inventory is an invaluable tool that simplifies the insurance claims process, ensures fair compensation, and provides peace of mind during difficult times. Taking the time to create a comprehensive inventory before disaster strikes, allows homeowners and renters to protect their financial well-being and recover more quickly from losses.

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Sonya Sellmeyer is a consumer advocacy officer for the Iowa Insurance Division.