Good Records Can Defend Against Disasters

While tornados and hurricanes are relatively rare in most parts of the U.S., more ordinary disasters like severe storms and fire can destroy your home and your possessions.

The best way to protect your family financially is to have an up-to-date inventory of your belongings and adequate insurance on your home, says Jeff McCarthy with Harrington Insurance Agency in Cambridge, Mass.

“If you have a detailed list and photos of your possessions, you’ll be able to collect what’s due to you with less hassle from your insurance company,” he says.

Know Your Stuff - Home Inventory” is a free service that lets you list your possessions and store photos and information about them. It offers secure online storage so you can always retrieve the information. If you don’t store your inventory online, you should put your inventory photos and list in a safe-deposit box, McCarthy advises.

You’ll also need enough insurance. Make sure your home is insured for full replacement cost so you’ll be able to rebuild it. If your home isn’t insured for at least 80% of its replacement cost, the coinsurance clause of your homeowner’s policy will kick in and you’ll get a lower, prorated settlement for both the house itself and your possessions, he points out.

With enough coverage on your home, you should have enough coverage for your personal property. Standard policies typically provide coverage for personal property equal to half of the building coverage. If you’re a renter or own a condo, you’ll need a renter’s or condo owner’s policy with adequate coverage for your possessions.

“Make sure your policy has replacement-cost coverage,” McCarthy says.

With it, you’ll get enough money to replace the items you lost. If you have older “actual cash value” coverage, you’ll get what the items are worth now. If your TV is 10 years old and refrigerator has seen 20 birthdays, you wouldn’t get much.

If you have valuable items like antiques, artwork or jewelry, let your agent know, because you may need special coverage for them.