So you bought a home, got the “hazard insurance” policy required by the lender prior to close of escrow, and now you’re all set, fully protected against all loss, acts of God, and everything else you can think of; then again, maybe not. Let’s say your house burns to the ground tomorrow, and everything inside is destroyed. Your lender may offer a few condolences, but fortunately for them, the “hazard insurance” policy was basically a “fire insurance” policy covering the structure not the contents unless you were wise enough to add a rider to that policy, so the lender is covered. Okay, but what about all the stuff inside, including those three $50,000 paintings and all those expensive clothes your wife owns that cost you a fortune, are you covered on that loss? If not, did the agent remember to ask about house contents insurance when writing your hazard insurance policy? You see, home content insurance is very similar to that homeowners insurance policy you already have, but only covers the contents of your house or building NOT the building itself. With your permission, let’s explore a few reasons on how to go about calculating house contents insurance. House contents in the original policy, may include any items in outbuildings, too.
House contents insurance works by totaling up the value of all the major items to be insured and provide the insurance company with a list of items you plan to insure. It won’t matter what you paid for an item 15 years ago or what your wife thinks that Oriental vase she received from Aunt Martha is worth, the values will be based on the cost of replacing your items and there will not be any sentimental value allowed for content insurance. So, folks, if you’re ready to play the “how to calculate home contents for insurance game,” let’s get started. What you’ll need to start is a digital camera.
1) – Get a large yellow paper tablet and pen, then go to the main living room where you spend a lot of time and make a list of everything that has some monetary value. Once done, repeat this scenario for every item in every other room in your house, putting the contents of each room on a separate page. If you have an attic or basement, repeat this process in those areas as well.
2) – In this second phase, and this will be a bit tougher, dig through and locate all the receipts of your major purchases. Now, using those receipts put down the value of each of those items you can match with a receipt. You might even check past tax returns or your computer for values if you’re one of those who never throw anything away.
3) – Now, on the stuff where you can’t locate any receipts, just write down what you estimate the values to be on any remaining items on your list.
4) – With you paper estimates tucked under your arm, go back to the main living room, and with your digital camera and blank memory card, take a nice picture of each item that you have no receipts for. This is also the time to mark on your paperwork the item name and picture number. Do this for every room you visited (basement and attics too) so your insurance list will be complete.
5) – Finally, make a copy of all of the data collected, then store the lists and picture memory card in a bank safe deposit box. If you trust air-tight containers, you can place the information in a large container and store in a safe, cool place in your house.
By this time you must be thinking: “is all this really necessary?” Actually, it’s not only a good idea for your own record-keeping, but it will end up being essential when seeking your house contents insurance.
Also, if you have a young son or daughter living in a rental apartment or house, remind them to investigate content insurance for their peace of mind. It’s not very expensive, but worth it especially if they have all the usual and expensive electronic gadgets that most college age kids own.