The devastation of Oakland’s fires last week should prompt consumers to review their homeowners’ or renters’ insurance to make sure their policies are up to date and provide adequate coverage.
And experts are encouraging policyholders to make a detailed inventory of their home’s contents.
“It’s very important to keep an inventory,” says Robert Hunter, president of the National Insurance Consumer Organization (NICO), an educational organization for consumers based in Alexandria, Va. “Most people can’t accurately remember what they have, and if they have a claim, they may forget something important. If you have an inventory, you can collect your claims much more easily.”
A detailed inventory of household furnishings and personal belongings also can help determine personal insurance needs.
And should consumers need to file a claim after a burglary, fire or other disaster, he says, they also may get hundreds or thousands of dollars more with a good record of household belongings. When items are listed in a notebook, he adds, be sure to include the approximate purchase date and cost.
In addition to a written inventory, industry experts recommend photographing each room in the home and individual items, either with a regular or video camera.
“They don’t have to go out and buy an expensive videocam,” says Harvey Seymour of the Insurance Information Institute in New York, which released a study earlier this year concluding that 77% of homeowners nationwide do not have a household inventory. “An ordinary camera, a Polaroid or even a little 110 will do it. Consumers need to get everything on film, and complete a written inventory to give definition to the photos.”
The institute publishes a free brochure, “Taking Inventory,” which gives a room-by-room checklist for household items, including spaces to list the purchase date and purchase price of each.
“And they should make sure there is a copy of it some other place--a safe deposit box, their office, a mother-in-law or brother’s home,” cautions Patty Lombard, executive director of Los Angeles’ Western Insurance Information Service (WIIS), the institute’s Western affiliate.
Once a written inventory with available receipts for goods is compiled, consumers may want to obtain separate appraisals of unique items, such as a Chippendale chair, says NICO’s Hunter: “Even a photo may not be able to make the distinction whether it is a reproduction or a genuine antique.”
For valuables such as antiques, jewelry or paintings, Hunter advises making sure the items are covered adequately by the homeowners’ policy. Most regular policies cover up to $1,000 for each item. If the valuables exceed that limit, consumers should consider a separate rider, floater or endorsement policy.
“Prices (of insurance) vary and they need to shop around,” says Hunter. “And don’t insure anything that can’t burn. That means they should deduct the value of the land and foundation from the property’s market value to determine the maximum policy limit. Foundations, basements and slabs are usually still usable after a fire.”
He advises determining the burnable value and obtaining a policy equal to 80% or 100% of the replacement cost of the house, not the land and foundation: “Don’t go below 80%.”
So, if it would cost $100,000 to replace the house, a policy for at least $80,000 should be purchased.
Full replacement-cost policies are also a good idea, both Hunter and Seymour say.
Such policies are usually 10% to 15% more expensive than a standard homeowners’ policy. But that increase may be offset by raising the deductible from the $250 minimum to $500 or more.
“You should always take as high a deductible as you can afford to,” advises Hunter. “Every dollar you don’t give the insurance company, you get to keep.”
Some insurance companies offer discounts to homeowners or apartment renters if they install smoke detectors, are nonsmokers or install burglar alarms.
“Discounts vary from company to company,” says Hunter, “but don’t pay too much attention to discounts. A company can offer seven different discounts and start with a higher premium than another company anyway.”
Beware, too, of insurance policies that have inflation-guard automatic increases in coverage and premiums, he says: “The company may select a rate of inflation, maybe 7%, that’s not right for your house. In a lot of areas, houses are sliding in value and the insurers are escalating the value. We’re getting quite a few complaints about that.”
Hunter recommends determining current home value by checking out what neighborhood homes have sold for recently.
When a claim must be filed, Hunter says, consumers should go to their insurance company armed with written inventory and photos, and take along another notebook to record “what goes on between you and the company.”
“You need to show them that you’re serious,” he adds.
Should the claim end up in court, he says, consumers shouldn’t be intimidated:
“Most people don’t know that since the insurance company wrote the policy, the courts basically favor the consumer.”
Consumers can order a copy of “Taking Inventory” by sending a self-addressed, stamped envelope to Insurance Information Institute, Dept. TI, 110 William St., New York, N.Y. 10038, phone (800) 331-9146; or WIIS, 3530 Wilshire Blvd., Suite 1610, Los Angeles, Calif. 90010, (800) 397-1679. The brochure and other insurance informational pamphlets are also available through the National Insurance Consumer Helpline at (800) 942-4242, from 8 a.m. to 8 p.m. EST, Monday-Friday.
The informational booklet “Buyers’ Guide to Insurance” can be ordered for $3, which includes shipping and handling, by writing NICO, 121 N. Payne St., Alexandria, Va. 22314.
TAKING A HOME INVENTORY
A detailed inventory of your home will be a valuable tool for insurance purposes in case of fire, natural disasters or burglary. In a notebook:
1. List the major items in each room of your house, condominium or apartment, including the purchase date and price.
2. Attach to your list any available sales receipts. This will help the insurance adjuster determine the value of your destroyed, damaged or stolen property.
3. Record the serial numbers of major appliances (usually found on the bottom or back of the item).
4. Engrave your driver’s license number on the back or bottom of items such as televisions, VCRs and stereos with an electric engraving device, which can be purchased at hardware or home improvement stores. This may help police identify your property if it is recovered after a burglary.
5. To back up your written inventory, take color photographs of your property. Or, if you have a video camera, make a videotape of each room and its contents. Photograph each wall of every room with closet or cabinet doors open.
6. Take close-up, detailed photos of jewelry, antiques and silverware, dishes and other valuables.
7. On the back of each picture, write the date, general location and contents shown. If you’re using a videocam, describe and value the items as you photograph them.
8. Store your written inventory, photographs and/or videotapes in a safe place away from home, a bank safe deposit box, a locked desk at work or at the home of a relative or friend.
9. Keep a copy of your inventory and negatives of the photographs at home so you can update your list from time to time when you purchase new items, remodel the kitchen, add a room or make other changes. Source: Insurance Information Institute DR, PAUL GONZALES / Los Angeles Times