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Renters Insurance Appraisals

Determining the value of a household’s personal possessions is an essential part of purchasing renters insurance.

According to national studies and insurance industry reports, the vast majority of renters grossly underestimate the value of their belongings. Miscalculating their possessions’ worth can severely hurt renters in several ways. It may lead them to select less coverage than they truly need (e.g. actual cash value policies rather than replacement value policies or overly high deductibles). If a storm or other emergency causes significant damage or losses force renters to replace their things using the funds from an insurance payout, then policyholders who undervalued their belongings may receive far less money than they need to restore their homes and property to their former standards of living.

Renters can protect themselves from these missteps by completing a personal property appraisal before or during their research and selection of renters insurance coverage.

Personal Property Appraisals

A personal property appraisal is a detailed and informed accounting of an individual’s or family’s belongings and the value of those belongings, both independently and as a whole. Appraisals are an essential component of renters insurance. Without a proper appraisal, neither renters nor their insurance companies can accurately attest to the full contents of renters’ homes and the true costs of replacing all those items in the event that they are lost or damaged.

Appraisals are conducted in a series of steps. These steps do not have to be completed all at once. In fact, it may take several days or weeks to fully complete an appraisal, depending on the number and types of items a household owns.

  1. Set up a spreadsheet. Although renters are free to track their belongings and their values in any format that works for them, experts strongly recommend setting up a basic spreadsheet for this information. Spreadsheets are easy to manipulate and update as renters’ needs, possessions and lifestyles change. Programming the spreadsheet to do the calculations involved also reduces errors and saves significant amounts of time in the long run. Renters should date the spreadsheet for reference and organize it by room or category for ease of use. Including a column for serial numbers is suggested for renters who own larger or costlier items. Personal property appraisal spreadsheets do not take long to set up and can substantially improve renters’ ability to accurately determine and recoup the value of their items when filing claims.
  2. Take an inventory. With spreadsheets prepared, renters should make a list of everything they own. This includes opening closets and cabinets to account for easily overlooked possessions like clothing, kitchen tools, workout equipment, electronics, books and seasonal items. Renters should make note of important details such as brand names, accessories or special features that affect the cost of an item. For example, a shirt or purse from a high-end designer line will be substantially more expensive to replace than one from a generic producer. Additional and separate tabs in the tracking spreadsheet may be used to break out or organize individual collections of things that are prone to grow and shift over time. Examples include both lower-cost items such as DVDs and higher-cost pieces such as coins or collectible stamps.
  3. Get visuals. Using a camera or video camera, renters should visually document what they own. Capturing images clearly can make a tremendous difference if they are ever submitted as part of a future insurance claim. Here again, renters must take care to include possessions that may not be stored in plain sight. Basements, attics and closets may contain a large number of seasonal items or heirlooms that need to be incorporated into this accounting for coverage.
  4. Do some research. Once items have been documented, renters can review their spreadsheets item by item and determine what it would cost to replace each piece. They may need to do some brief research to complete this step. If the item itself is no longer available for purchase, then renters can price a comparable item and use that number in their spreadsheets.
  5. If necessary, then call an expert. Renters who own special, high-end items such as jewelry or heirlooms may need to have those pieces formally assessed by a professional appraiser. Generally, any individual item with a value of more than $2,000 to $3,000 will need a professional appraisal. For items worth $5,000 or more, many insurers require that a copy of the professional appraisal be attached to the supplemental insurance rider and renters will need to have that item fully covered under their policies.
  6. Make a copy of the documentation. Appraisal documentation should not be kept solely in hard copy in renters’ residences. In the event of an emergency or catastrophe, renters may not have access to their homes and any documentation stored there may be damaged or destroyed along with other property. To ensure that documentation will be available when and where it is needed, experts advise that renters keep additional copies of their spreadsheets and any accompanying professional appraisals in secure places off-site (e.g. safe-deposit boxes) or upload digital copies to an online storage site accessible from anywhere. Some insurance companies offer online guides, programs or tools to assist renters in walking through and organizing this process.
  7. Schedule time to review and update the spreadsheet. Possessions are not static. Renters will naturally sell, lose or otherwise cease to own some items over time while acquiring others. To protect their investments and keep their policies and coverage in line with their households’ evolving needs, renters should schedule a time at least once a year to review and update their appraisal spreadsheets.

Establishing the Value of Property

Determining the exact value of personal belongings can be tricky. However, there are a few generally agreed-upon practices that renters can use to reach an acceptable figure.

Renters who know how much an item initially cost may be able to use standard accounting depreciation rates to assess remaining value. Online depreciation calculators significantly simplify this process. For example, if a renter purchased furniture for $2,000 two years ago, then he or she could enter the type of furniture, its purchase date, its original cost and its current condition into a depreciation calculator and receive an estimate of its remaining value. Learn how to find inexpensive furniture and decoration here.

Smaller items and commodities can most efficiently be appraised by looking at their replacement costs. For example, books, DVDs and household goods have fairly standard pricing. Renters can use retailers’ websites to look up how much it would cost to buy a new copy of a particular book or DVD and use those figures for the value of their existing copies. For some categories of items, renters may find that comprehensive authoritative guides exist. A well-known example of this is the Kelley Blue Book guide to used car values.

Details Count

Renters taking stock of their possessions should keep in mind that although the process may seem tedious at times, it is critically important to stay engaged and pay attention to details. As noted above, different styles and brands of clothing, accessories and furnishings can have very different price points. Unless higher-cost pieces are explicitly documented as such, renters can expect to only receive the value of a comparable, non-brand-name item in the event of a payout.

Additionally, renters should intentionally take note of furniture and other organizing tools that are often easily overlooked. For example, an entertainment station holding a family’s electronics, the dresser holding a renter’s clothes and the freestanding bookshelf housing books and collectibles are just as likely to sustain damage in an emergency as the items they hold. Even if they do not seem particularly expensive, renters can expect to have to replace items not listed and accounted for out-of-pocket in an emergency since renters insurance may not cover items undocumented.

Finally, renters are strongly encouraged to review and update their personal property assessments whenever they make significant new purchases. Periodic (e.g. annual) reviews of their master appraisal spreadsheets are also recommended, as regular updating makes it easier to retrieve and use crucial asset information in the event that a renter needs to file a claim.

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