By David Spring, Ph.D., CFP
Editor’s note: David Spring is a Certified Financial Planner and a client of ours. We assisted David with his insurance claim after his house was destroyed by fire. (Thankfully, no one was injured in the fire.) David had done such a good job of documenting his personal belongings that his claim was never really disputed by the insurer. He eventually wrote this article for his own clients about his experience and the value of documenting your belongings now, before disaster strikes. We think this information will be valuable to you, and David was kind enough to let us reproduce it here.
Having talked the talk, now I’ve walked the walk. For many years I advised clients to make a good photographic record of personal possessions and store this in a safety deposit box in case of a major theft or fire. Further, I ask them to check to see if they had a rider (addition to their policy) that covered against extra costs they might incur due to building codes and ordinances passed after their house was built, which would add to the cost of reconstruction over and above “replacement cost.” Also, I asked them to check to see if there were exclusions for theft of guns, jewelry, rare coins, art, etc. that would be needed to be covered by purchasing a rider policy and/or separate coverage. Having done those things, the Springs are really glad we did.
When you fill out a claim for personal possessions lost due to fire or theft, the insurance company will want an itemized list of everything you lost, the approximate age of the item, the make and model number if available, and the cost to replace the item. We had over a thousand items listed. Without a good photographic record it would be impossible for most people to make a good claim, let alone document what was lost.
Make a copy of your documentation before handing on the original. You will want to check your homeowner’s policy to make sure you have coverage for additional living expenses, so that in case you do lose your house, the insurance company will pay to rent a residence for you while your home is being rebuilt.
The insurance company will want to use a computer program to come up with an estimated cost of repair based on general architectural features of your home (such as square footage, location, roof type, etc.) These can then be compared with estimates from the contractor responsible for repair or reconstruction that may take into account more unique aspects of your particular home, so take photos outside and in of architectural aspects of your home and keep any plans or blueprints outside the house.
I would be sure to get photos of valuables stored outside the house in any sheds or other outbuildings. I would take all clothes (including shoes) out of all closets and lay them out on the bed for photos, noting the make of each item and approximately when acquired. I would also be sure to pull out drawers and photograph the contents of each drawer individually. If you get invoices for major purchases, I would definitely store these in your safety deposit box too. Based on several books I have read recently on how to make a property and casualty insurance claim, you should consult with an attorney before filing anything with the insurance company or signing anything, so you know all of your rights under your policy (My initial visit cost around $300 dollars and was worth it, in my opinion.)
Keep a copy of at least the declaration pages (the pages that show how much you are covered for) for your car and homeowner’s policies in your safety-deposit box along with photocopies of all credit cards, drivers licenses, phone numbers, tax returns.
Some other candidates for filing in your safety deposit box would be copies of any passports and your originals of Social Security cards.