A homeowners insurance claim can quickly become overwhelming, especially if you are dealing with a total loss. Not only do you have to inventory everything you own, you have to figure out the cost to replace it and how long you owned the item.
After our house fire, our insurance assigned someone who came out to the house to inventory the contents. After donning the PPE gear to go inside, they refused to inventory our upstairs because our house tested for asbestos. This wasn’t a surprise for us because our home was over 50 years old. This did throw a curve into our inventory process because we had to do it from memory. We sat for hours as we rattled off what we owned. At first, I think the inventory guy was a little surprised that I could recall what was in every closet and cupboard. After I explained that I had just gone through the whole upstairs after reading Goodbye Things the summer before, it started to make sense. I highly recommend ready the book, it changed the way I view my possessions.
Count Everything…Including Your Toothpicks
This advice was given to me the day of my house fire by a neighbor who had been through a house fire herself years earlier. She told me I would want to include EVERYTHING, even if it didn’t seem important, like a box of toothpicks. She told me the insurance wasn’t going to be easy to deal with and I most likely wouldn’t get back what I thought my items were worth up front, so I need to include everything. I did. One large box of toothpicks worth 98 cents is on my inventory list.
Know How Old Your Items Are
Once you have all your items listed, you need to know how old each item is. This isn’t how long you’ve owned the item, but when it was manufactured. If you buy a lot of second hand things like I do, this is a guessing game. The reason you need to know the age of an item is because the insurance company is going to apply an age depreciation to each item. One example I will give is for my coffee maker. I know my coffee maker was 3 years old and would cost $11.54 with tax to replace. It wasn’t anything fancy. My insurance company said that a coffee maker will depreciate by 10% per year. I agreed with this because of the resources I used online also said 10%.
Now, the insurance company is only going to cut me a check for the cash value of the item. This means that they are going to subtract the depreciation cost from the replacement cost. My item is $11.54 to replace and the depreciated amount is $3.46 because my item is 3 years old at 10% per year equals 30%. So, I would receive $8.08 up front to replace my item and get back the $3.46 after I give my insurance a receipt for the replacement. Sounds good, right? Sure it does, but you need to be careful to watch that age on the insurance companies list. Instead of listing my coffee maker as 3 years old, they put it as 6 years old. This means they are wanting to take 60% of the replacement price instead of 30%. This is leaving me with only $4.62 up front.
Some might say that it doesn’t really matter because you’ll gain it back once you replace the item. This is true, however you need to consider if it is an item you are not going to replace. If you don’t replace the item, you are only left with the $4.62 and missing out on $3.46 that you will never get back. This sounds small, but considering I have 1200 line items on my inventory list, this will add up quickly if you aren’t paying attention.
Be Careful With Lot Pricing
One thing I noticed when we sat down with the inventory guy was that he was keen on suggesting we lot things together. One example is my daughter’s large amount of stuffed animals. When I say large….this is the picture I took the summer before our house fire.
No one really wants to go through each item one by one, but I also had no idea what the lot amount should be either. We ended up not putting it on the list the first day because I wanted to think about it, but I remember the number that was given as a suggestion was $200 worth of stuffed animals in the house. I took the time to remember each stuffed animal we own, in large part to this photo I took. It ended up being close to $800 if we replaced them all.
Create Your Own Inventory List
Once we received the inventory list from the insurance, I made my own spreadsheet with the information. By doing this, I was able to change prices, ages of items and create formulas to insure everything was fair for our homeowners insurance claim. I spent hours each day over several months verifying prices and ages listed for each item. It was a daunting task. It was worth it because the disputed amount was over $35,000. Not a small number. This was because the insurance list had the wrong prices and ages on most of the items. I know what I had and how old it was. The insurance was guessing because they didn’t have a true inventory for the upstairs.
Keep Track Of Your Homeowners Insurance Claim
We have still not resolved our homeowners insurance claim for our house fire. It has been over a year and a half. While we have received several checks over the year and a half, it still is ongoing. We have replaced many items and given receipts that are just waiting to be processed still. You need to make sure to keep track of your claim.
I have a folder I created that contains every receipt I was able to find for the things I owned. It also contains pictures of all the before and after photos I took when I minimized my possessions the year before. It contains another folder that has the documentation and notes for everything we have sent to the insurance.
Stay organized and it will make the claim process be less stressful. You will know what your items are worth and if the insurance is being fair. If things aren’t fair, you have to be able to prove why they aren’t fair, or the insurance company will likely not budge.