Preparing for Property Damage Insurance Claims: The Importance of Regularly Documenting Everything in your House
You may not be prepared for a property damage insurance claim. Many homeowners aren’t prepared.
Have you documented everything in your home lately? Have you thoroughly checked your property? Do you have an itemized list of the contents of your home?
Many homeowners fail to document their possessions or property – and this can lead to serious headaches. It can jeopardize a future property damage insurance claim, for example. It can also make a claim much more complicated, or even contribute to a reason claims are denied.
That’s why documentation is important. Today, we’re explaining why you should document your home regularly – and how to do it.
How Lack of Documentation Could Jeopardize a Claim
Many homeowners fail to check their home annually or semi-annually. This is a problem.
Lack of documentation could threaten a property damage insurance claim:
- You might not notice a part of the home that requires maintenance – like a leaky roof or broken shingles
- You might be significantly underinsured based on the value of your home and possessions
- You might have no evidence proving ownership or value of many items in your home
- Your high-value items may not be covered by insurance because you don’t have riders
- Your insurance policy could have exclusions you never knew existed
All of these mistakes could complicate a property damage insurance claim. In some cases, they can even cause an insurer to deny your property damage insurance claim, forcing you to pay tens of thousands of dollars out of pocket.
For all of these reasons, it’s crucial to review your insurance policy and coverages annually or semi-annually.
Do an Annual or Semi-Annual Checkup
You don’t have to walk around your home with a clipboard every week. Instead, set a specific time of year to review your home insurance policy offerings. Do an annual or semi-annual checkup.
Many homeowners do a checkup around “spring cleaning”, for example. Winter is over. You’re cleaning your home. It’s a great time to document your possessions, check your policy, and inspect your home for damage or maintenance issues.
Step 1) Check Your Property for Maintenance Issues
Maintenance issues can cause insurance claims to be denied. Your insurance policy requires you to maintain your home and repair wear and tear.
If you fail to maintain your home, and then try to file a claim, then the insurer can rightfully deny your claim. You did not abide by the terms of your insurance contract, so the insurer can deny your claim.
Let’s say a hailstorm damages your roof. You notice a few shingles are missing, but you don’t think much of it. You ignore the issue. You don’t go up on the roof to check for damages, nor do you check your attic for any leaks.
Two weeks later, you come back from vacation to a flooded house. There’s a hole in your roof and it rained all week. Your home has extensive damage. You file an insurance claim, but the claim is denied because you had a maintenance issue. You left your roof in bad condition. Because of that, a rainstorm damaged your home.
This isn’t some crazy scenario: situations like this happen to American homeowners every day.
That’s why it’s so important to regularly inspect your property for damage or maintenance issues. If you don’t feel qualified to inspect your property, then hire someone who is. It may cost a few hundred dollars to hire a qualified home inspector every year – but it could save you hundreds of thousands of dollars on a future insurance claim.
Here are some things that should be on your DIY home inspection checklist:
- Check your chimney. Make sure the chimney is straight and whole with no missing bricks or mortar. Check the tightness of the flashing (the sheet metal between the roof and the chimney that prevents leaking).
- Check your roof. Make sure the roof lies flush to the house with no sinking, curling, or visible damage. Check for mold or rot. There should be no more than two layers of roofing. Check the soffits and fascia for decay.
- Make sure your gutters are clean, rust-free, and securely attached to the home. Consider pouring water down gutters to verify they’re directing water away from your home – not towards the foundation.
- Check house surfaces and exterior siding. There needs to be at least six inches between the ground and any wood on the house. Look for signs of visible damage around the foundation, including stains, cracks, rot, loose siding, or vegetation.
- Check your windows and doors. Make sure the frames are intact and the joints or caulked. Look for broken glass or screens.
- Make sure the foundation of your home looks right. From the side, your home should look square with no leaning or sagging. All framing should be straight, with the roof ridge and fascia level.
- Look for standing water around your property, as this could be a sign of sinkholes. Make sure there are no tree branches touching the home or looming above the roof. Unattached structures, like fences and sheds, should be intact with no mold or bug damage.
- Check the underside of your roof (in your attic) for any signs of decay, damage, or water stains. Make sure there’s adequate ventilation in your attic.
- Check bedrooms, bathrooms, and all other rooms of your home. Look for stains, decaying paint, broken electrical outlets, and other issues.
Remember: if you don’t feel comfortable performing a complete home inspection, then hire a professional home inspector.
Step 2) Document your Possessions
Insurers recommend keeping a home inventory. A home inventory is a list of your belongings and their estimated value. If you have a home inventory, it makes a future insurance claim significantly easier.
A home inventory isn’t just about your jewelry and furniture. It’s about the value of your home. Have you recently renovated your home? Has your home significantly increased in value over the past few years? All of these things need to be documented.
Start with an Excel spreadsheet or similar program. Then, implement the following tips:
- Keep bills, receipts, warranties, and instruction manuals for your more valuable possessions; all of these items can serve as proof of ownership
- Store your records and receipts in a safe place, like a safety deposit box or secure online folder (or, better yet, store multiple copies in multiple online and offline locations)
- Review your home inventory every year and when you make new purchases; the more stuff you have in your home, the higher the value of your possessions will be
- Take photos or videos of all of the valuable possessions in your home
- Store financial records, credit card records, tax documentation, government documentation, and other important household documents in a safe, off-site location
- Get professional appraisals for high-value, one-of-a-kind items like jewelry, artwork, antiques, collectible items, and other similar possessions
Ultimately, you want to keep documentation for anything in your home you want covered by insurance. If you don’t have documentation, then you may not be able to make a claim. Or, you may not receive proper compensation for that item.
Step 3) Check Home Value to Avoid Being Underinsured
Most homeowners assume they have enough insurance. Unfortunately, many homeowners don’t realize they’re underinsured until it’s too late.
Your home’s value may have increased. The value of your possessions may have increased. Your policy limits have not increased, which means you may not receive adequate compensation for your home in the event of repairs or a total loss.
Many homeowners will renovate their home, for example, which significantly increases the value. Unfortunately, they don’t change their home insurance coverage, which means the added value of the home is at risk.
Other homeowners may not realize how valuable their possessions are. In step 2, we performed a home inventory. You may be shocked to discover how valuable all your possessions are when added up. You might have only $25,000 of coverage for possessions that are worth over $50,000, for example.
Or, many homeowners take out a rider. If you recently purchased a wedding ring, for example, then you may need to add a rider to your insurance policy. This rider extends coverage for that wedding ring.
For all of these reasons, it’s crucial to review your policy limits regularly. After documenting everything in your home, check your policy limits. Make sure you have enough insurance coverage.
Final Word: Start a Home Inventory Now
The best time to start a home inventory was five years ago. The second best time is today. The sooner you start a home inventory, the less risk a claim will be denied.
Pick an easy spot to start – a contained area like your kitchen appliance cabinet. Start with recent purchases before tackling older possessions with less documentation.
Don’t forget to check your property. Good property maintenance is crucial. If you miss a maintenance issue, it could cause your claim to be denied.
Good documentation is crucial – and an annual or semi-annual checkup could help you avoid headaches on a future property damage insurance claim.