Insurance companies love to accept premiums but hate to pay claims. Recently, CNN obtained the training manuals for Allstate Insurance. The training manuals procedures were based on the recommendations of the New York consulting firm McKinsey & Co… The manuals outline a plan for Allstate to increase profits by reducing claims payouts. According to reporter Anderson Cooper, the manuals train insurance adjusters to force “smaller walk-away settlements”, i.e., settle the claim quickly for less money than requested by the policyholder. Implementation of the McKinsey plan raised Allstate’s profits by 140% from $2.08 billion in 1996 to $4.99 billion in 2006. Apparently, shortchanging policyholders is good for the bottom line. With each claim submitted, the insurer’s first challenge to the insured is “prove it”!
A Policyholders Best Defense is Good Documentation
The challenge to prove the value of your household contents is well met with a detailed home inventory. A home inventory allows a policyholder to keep coverage amounts up-to-date and provides documentation in case a claim must be made.
A detailed home inventory is also useful when you relocate; with it, you will be able to calculate the value of your household goods shipment. Moving companies charge according to a shipments weight, value, distance travelled, and extra services provided. If you know your shipments value, you will be able to determine if the mover is charging you fairly.
How to Assemble Your Home Inventory
You will need a helper. One person sorts and counts while the other writes. Start inside the house, and work your way from the top of the house to the bottom. Go room to room with a consistent pattern so that you do not miss anything: always clockwise or counter-clockwise around the room.
Begin by taking a photograph or video of the room, and individual photos of any particularly valuable items. Write down what is on the walls as well as what is on the floor. For small goods, write down identifiable groups of items such as 200 hardcover books, 100 paperback books, 42 nick-knacks, etc… For any item over $75, write down the brand name, price paid, where you bought it, and the item’s age. If you can’t remember what you paid for an item, do an online search for the item and note the current price.
On your list, put a star next to any item that you think may be valuable. Get appraisals for antiques, art, and collectibles. If the nick-knacks are porcelain and the books are first editions, they are valuable items. When you are finished, follow the same procedure for the outbuildings: the garage, shed, workshop, or whatever. If there is a rented self-storage unit, vacation home, recreational vehicle or boat, they will need to be inventoried as well.
What to Do With the Inventory
A thorough inventory is useless if it burns along with your house, or if you can’t find it when you need it. The best way to ensure access to your inventory is to enter the information into an online inventory database. The Insurance Information Institute offers free online storage for your home inventory via their Know Your Stuff home inventory software. The software is easy to use and you can log in from any computer. Software video training is offered for free on the Institutes web site.
You’ll Also Get Peace of Mind
Your possessions are a reflection of your personality; we tend to accumulate the things that we love. A thorough home inventory won’t bring back things that are stolen or destroyed, but it will enable you to be treated fairly by your insurance company.