Most home and rental insurance policies include coverage for your belongings in the event you are robbed or if your house is destroyed in a fire, flood, or similar accident. Many people have trouble knowing how much their possessions are worth, and so they may end up paying more or less than they need to in order to replace their items.
Here is a guideline for helping you estimate exactly how much coverage you need for your belongings, not just your house.
1. Tally up big-ticket, basic items first.
You begin by taking stock of the items in your house. Go room by room and write down the largest, priciest items. These include things like:
- kitchen appliances. Write down how they cost when you bought them, or what you think they would cost to replace (if they were there when you moved in).
- furniture. Dressers, sofas, shelving, dining tables and chairs, and end tables are all normal features in home. People overlook furniture costs sometimes because usually furniture is acquired over time, here and there, and you might not know how much it would cost to find replacements for everything all at once.
- computers and electronics. Your TV, laptop, desktop, cell phone, and stereo sound systems represent a significant amount of money. Don't forget to add in extra money for things like cables and adaptors that you've had to gradually order to make changes here and there.
- mattresses and bed frames. How much did your mattress costs? Would you be able to find the same one again, or would you have to pay more for a replacement? Don't forget about children's mattresses as well.
- small appliances. Some appliances, like nice mixers and blenders, are costly investments. You want to make sure they make it onto your list.
- power tools. Don't forget that the garage counts as a room. Your lawn mower, weed whip, and any other tools you might have collected can be damaged or stolen.
You might be surprised how many items you have in your home that each represent a reasonable amount of money.
2. Move on to forgotten storage.
The next thing to tackle on your list of assets is stuff you might forget about on a daily basis. For example, if you lose your home in the summer time, you might forget about winter coats and boots entirely until the seasons change. You don't want to forget to cover the stuff you have in your basement or attic. These include things like:
- off-season sporting equipment
- seasonal clothing
- camping gear
- bike racks
- the barbecue
- baby gear, including car seats, swings, strollers, and packed away clothing
- Christmas decorations
Out of sight is often out of mind when you're thinking about what your stuff is worth.
3. Don't forget the small stuff.
Finally, the small stuff. This is the stuff you don't even notice because it fades into the background of your life. Small stuff adds up, however, and you should make sure your insurance is enough to cover:
- light fixtures. These are sometimes not considered as part of the house, and are a possession instead.
- china and other dishes.
- ktichen utensils, including measuring cups.
- shoe racks in the closet.
- games and cards.
- towel rods, toilet paper holders, hat racks, and coat racks
- curtains, cushions, and throws.
4. Add a little extra.
This "little extra" is there to take care of the revolving items in your home: food, clothing, shoes, and other disposable supplies (scissors, glue, pens, paper, staples, envelopes, etc). Restocking your entire panty at once takes significant capital, and so does replenishing your closet and office.
5. Don't forget the special items.
Finally, you need to remember the special items. These are unique to each household, but include things that relate to hobbies, collections, art, or business. Be sure to tally up the worth of your:
- musical instruments
- sewing machines and fabric stash
- photography equipment
- art collection
- rare coins and valuable jewelry
- specialty sporting equipment, such as road bikes or treadmills.
People can grossly underestimate just how much their lifestyle would take to totally replace. Talk to a loss consultant for more information.