Create a home inventory to protect what's yours


Welcome to Day 6 of our 30-Day Easy Money Makeover! Every day in April, we're bringing you strategies to help you improve, and feel more confident about, your money situation. Follow along and see the rest of the calendar here .

Creating a home inventory is daunting because you have a lot of stuff. It’s also really important because: You have a lot of stuff.

And in the event of a natural disaster, burglary, or other home-damaging emergency, you’ll be glad you made one.

“It’s easier when you have this information handy for your insurance company if you have to file a claim,” says Loretta Worters, a spokeswoman for the Insurance Information Institute. An accurate list of your possessions helps ensure you’re fairly compensated for those losses.

And it doesn't have to take more than a single day. Here’s how to do a home inventory in two easy steps:

1. Take lots of pictures

As part of a CNBC project last year, I tested a handful of smartphone apps for making a home inventory, including Encircle (free) and Nest Egg ($3.99, with in-app purchases). Use the app to snap pictures of each room, and then spend a few more minutes getting close-ups of the contents of drawers, closets, and so on.

That’s the bulk of what you need for now. Should something happen requiring an insurance claim, you can go back in and use those pictures to create a more detailed list.

2. Hunt down key papers

If you have any unique or expensive items—think antiques, high-end electronics, or jewelry—gather up any paperwork you have that speaks to their value. Receipts and appraisals help, as well as serial numbers and other identifying marks. If you’re using an app, take pictures of these documents to include as part of your inventory; otherwise, scan them so you have a digital backup and then store the originals in a safe place.

That’s it! You’re done.

If you’re up for more, there’s a third step.

Now that you know how much stuff you have, go over your homeowners or renters insurance policy to make sure you have enough coverage, says Worters. Look at your overall coverage for possessions, and check to make sure you’re signed on to be reimbursed for their replacement value rather than actual value.

The difference is whether you get enough cash to buy a new TV versus what your 5-year-old TV is worth today. Pay particular attention to policy limits for those expensive items you detailed in Step 2. You may need to purchase additional coverage in the form of a rider or endorsement to make sure those goods are protected.

Now that you’ve made a home inventory, the ongoing challenge is keeping it updated. Aim to catalog new purchases as they come in, Worters says. As she points out, “it’s only useful if it’s accurate.”

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