Nobody wants to think about it, but catastrophic loss happens every day, to people just like you – people who are prepared, cautious, responsible, and informed. Even so, catastrophe strikes.
If your home burns to the ground, so does everything inside, and your insurance company wants a detailed inventory of contents to determine a settlement to cover the losses for which you’re covered.
It’s important to read your home insurance policy, even the fine print. It’s a contract between you and the insurer, so know what you’re paying for.
For example, if you keep a wad of cash under the mattress, read your policy – the section on loss of cash. Your insurer is only liable to pay the maximum dollar amount stated in the policy. The same with other possessions. Your insurance policy has limits of coverage for things like jewelry, collectables, fine art, antiques, furniture, hand-woven rugs, designer clothes, and other expensive contents.
Most insurance providers expect a special rider to your basic policy covering items of undetermined value. You can say you had a Picasso hanging on what used to be a wall, but your insurer isn’t going to take your word for it.
So, to enjoy the best possible outcomes at the worst of times, here are some must-follow tips to help you recover from a life-altering catastrophe.
Have everything appraised by an authority. If your home is filled with fine art or expensive antique furniture, get it appraised. It costs money for an expert to appraise items, but an appraisal assigns a value to items that are difficult to valuate. By the way, if you don’t like one appraiser’s written assessment of the value of items, get another appraiser to provide an educated estimate of value.
Write it down. Not only does the insurance company want a complete, documented inventory of contents, so do you! If the homestead goes up in flames, there’s no way you’ll remember everything of value when filling out the inventory form to settle your claim for lost contents.
Go around the house with a pad and pen. Make a list of items of value – items you’d expect to be replaced in the settlement of your claim. If you don’t know an item’s value, see Point 1 above.
Create a spreadsheet of items of value. Keep a file of appraisals of antiques, jewelry, fine art, and other items of value. Then, keep it up to date. If you purchase a valuable antique, you want to write it down and you want it insured against loss.
Document your documents. You have plenty of valuable paperwork in the house, either tucked away in a desk drawer or stored on your hard drive. Secure account names, passwords, copies of wills, and the deed to the house, the title to your car, and birth certificates. Either store the originals safely, make copies that you store safely, or store this paperwork on a flash drive in a secure location away from your home.
Prove it. Nothing says “proof” like a picture or, better yet, a walk-through video. You can do it with your smartphone or tablet, so no special equipment required. Take pictures of everything of value. Take a long shot view of the entire room, one room at a time, from different angles to “document” what was in each room, and perhaps, jog your memory when completing that inventory of losses. Then, use your list to take snapshots of that very expensive antique sofa.
Your home insurance company wants a list of your losses. So do you. And you both want proof that you did, indeed, own a very expensive computer that’s now a melted blob of goo where the home office used to be.
Don’t store your proof at home. If the house burns to ashes, or gets torn from its foundation during a flood, you wave good-bye to your proof of inventory as you wave good-bye to a house that’s now floating downstream.
Again, store home contents inventory on a flash drive and tuck it away at work or in a safe deposit box at the bank. Store the proof you’ve collected where it will be safe even if you lose everything else.
Having a complete inventory, with videos and photos of lost items stored on a flash drive in a secure location, helps the insurer settle your claim. It also helps in getting every penny to which you’re entitled.
Talk to your insurance company or broker. Ifyou have special insurance needs, talk to your insurer or your local broker about what’s required to return life to normal after a catastrophe.
Identify potential significant losses. For example, if you own a store, you may keep a large amount of cash at home overnight. Talk to your insurer and get covered for the amount of cash you might keep at home.
It may be expensive, and you may not want to think about the worst case scenario, but it happens. If it happens to you, be ready to restore your life quickly by taking steps now to get your rightful payout from the insurance company that covers your home and contents.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.
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