Do you understand the basics of your insurance policy?
Posted August 17, 2009
Taking stock of your possessions can save a lot of grief in the event of loss.
I continually hear the same questions or statements when discussing why people need an inventory. We all agree (unfortunately) that an insurance policy reads as easily as any other legal document! This, of course, is the source of not being able to understand your coverage.
So I want to dispel some of the most common myths, or misunderstandings, regarding personal property insurance.
I don't need an inventory; I have insurance.
Without a document that contains a list of your belongings, and photos to back up your written report, you will forget a large number of items. It's hard enough just trying to remember when you're sitting here, relaxed and comfortable. If you were under the stress of just having experience a loss, it will be impossible! Insurance companies required you to fill out a claim form; thus, if you don't list something you won't receive money to replace it.
If I have a disaster, I'll get a check for the amount of my coverage.
Most insurance companies won't just cut you a check without proof of ownership. And often you must prove ownership. For example, a stolen 42" television brought the theft victim only $400 because he couldn't prove it was a big screen TV. Instead, he received the standard allowed for a television. Consider this—let's say you have $100,000 in coverage. If your belongings are worth only $60,000, you will not receive $100,000.
My jewelry isn't worth that much.
Insurance policies have limits on items, and jewelry commonly has a limit of $2500. That limit isn't per piece; it's for the total of all jewelry and watches.
We don't have anything worth inventorying.
Anything you own that you can't afford to replace without financial help is worth something! What is the amount of your coverage? Do you have those funds stashed away in case of a disaster?
I'll be able to remember everything.
Try it. Close your eyes and list everything in the room. Don't forget the items in closets and drawers.
I am not an insurance professional, but have discussed these issues with victims and insurance agents enough to be aware of the basics. Talk to your agent; ask these questions. If he or she is too busy, or won't take the time to help you understand your policy, it's time to find a new agent!
Cindy Hartman is President of Hartman Inventory LLC, a woman-owned business that provides business and home inventory services for estate planning, estate settlement, financial planning, disaster recovery and more. Her website is HartmanInventory.com.