Settling insurance claims can be a daunting task. The first few items that come to mind are easy to remember and price out. The barn lost a roof, the pickup was totaled. Those are both examples of large singular assets that have substantial value. In the case of events such as floods, tornados, and other disasters, the assets lost start to go much deeper. Do you remember all the clothing, tools, kitchenware, electronics, and other small asset items you have?  While these are usually small dollar assets, their total value can be quite substantial.

Creating and maintaining an inventory record for your home and business will help you settle insurance claims faster, verify losses for tax returns, and help you identify the correct amount of coverage. The following steps are recommended if you are ready to get started.

Getting Started

The first thing you need to get started is an inventory worksheet. This can be paper or digital. Sample worksheets for two formats — in Word and Excel — can be downloaded. With either format, it’s important to include the following categories:

It’s helpful to create a list for each room. For instance I might have an inventory list for our horse barn and an inventory list for the machine shop. You could also add a location column to the above example. The idea is to keep the process as simple as possible for both the current effort and future upkeep. Another point some may question is the inclusion of a Discounts Received column. If you have replacement cost insurance, knowing what the retail value of the asset was, versus what you paid for it during a sales event, is helpful when working with your insurance agent.

Once you have your worksheet, it is a process of getting started. Pick an easy spot in the beginning. It could be a hallway closet or other contained area. Go through item by item and add them to the worksheet. You may want to put a dollar limit on your inventory worksheet. It could be something as simple as $50 minimum to be recorded. For items such as clothing, list them by a general category. Each pair of jeans I have may only cost $40, but I own five pairs. I would create an inventory line item of five pair of jeans for $200.

In the case of big ticket items like jewelry, art, guns, and collectibles, you may need special coverage. As you come across those items put a star next to them and have a discussion with your insurance agent. Don’t forget to inventory items that belong to you that are off-site at locations such as a self-storage unit.

Try not to get overwhelmed. Once you start an inventory list, try to keep going. Even if you have an incomplete inventory it is better than nothing at all.

Proof is in the Details

Using the categories in the sample worksheet above will be a tremendous help, but you can take it a step further. While recording inventory, taking pictures of individual assets or a video of a room can give an extra layer of protection. You may catch something you missed, or at least have proof of ownership of a claimed asset.

Keep proof of value of assets by holding onto or scanning sales receipts, purchase contracts, and appraisals. There are also apps available on mobile devices, but understand how the app developer backs up the data so you know it will be available when you need it.

Also insure you have a backup outside the home. Off-site digital backups are easy and copies can be made of paper inventories and stored in a safe deposit box or a relative’s home.

In It for the Long Haul

As with most accounting and recordkeeping processes, this is a living, breathing document that changes all the time. Many find keeping the list updated is easier than the initial startup, but it can still be tedious. Try to make it a habit to add significant new purchases to the list as you acquire them.

Keep a running tab of the total value of your assets on your inventory worksheet and contact your insurance provider anytime there is a question about adequate insurance coverage.