How can I create a household inventory for insurance purposes?

Did you know that nearly 60 percent of Americans don't have a list or some other record of their belongings? According to a 2012 survey conducted by the National Association of Insurance Commissioners, 59 percent of those questioned have never inventoried their possessions. Of those that did, 48 percent did not keep receipts; 27 percent never photographed their belongings; and 28 percent do not have a copy of the inventory outside their home [source: Speer].

Inventories are important because on average, insurance companies will only reimburse a homeowner's contents up to 50 percent of the home's insured value, although some companies provide up to 70 percent [sources: Speer; CBS Detroit].

An inventory is not only record of the contents of your house and their value, but it is also a good indicator of whether you have enough insurance coverage [source: California Department of Insurance]. Most insurance policies give you a choice on how to insure your belongings. You can get either actual cash value or replacement cost coverage. Actual cash value will allow you recoup the amount you expect to get if you sold the items, minus the depreciation. Replacement cost coverage allows you to replace your personal property at today's market price. Replacement cost coverage is more expensive than actual cash value coverage [source: Allstate].

How do you get started creating an inventory? There are many ways to begin. I took the low-tech approach and listed my possessions in a notebook. Thanks for the help. I also took pictures. If you decide to write everything down and take photographs, use this handy home inventory guide. You can paste the pictures next to the appropriate descriptions. Some people videotape. Others put their information on a computer. If you really want to go high-tech, and store your info in a safe place, the Insurance Information Institute has free online home inventory software that makes it easy to create, update and store your information. There's even an iPhone App.

Let's begin. The first thing we'll do is write down all the expensive items including jewelry, furs, and collectibles. I don't have any furs or jewelry, but you might. Let's not forget to list toys, old record or comic book collections, CDs, video games and clothing [source: Insurance Information Institute].

There are a couple of ways to create a list. We're going to write down the belongings in each room. Some people might choose to categorize their possessions. Others might decide a combination of the two. Whatever way you decide, make sure you include general appliances such a dishwasher or air conditioner; household items including carpets, rugs, bookcases, chairs, clocks, mirrors; living room furniture; dining room furniture; clothing; the contents of all the bedrooms, including linens and night tables; kitchen tables and chairs; patio furniture; everything in the garage, home office, library and den [source: Insurance Information Institute]. You get the picture.

As we go from room to room and item to item, we will take photographs. Others might decide to videotape. We'll add the photos next to the written descriptions. Are you still writing? Thanks. Digital cameras are great for taking an inventory. If you have a film camera, scan the photos into your computer [source: Insurance Information Institute].

No matter how you're going to record your possessions, open drawers, cabinets and closets. If you're videotaping, narrate what you see as you go from room-to-room, closet-to-closet and drawer-to-drawer [source: Insurance Information Institute].

If you can, keep all your receipts and serial numbers of the big-ticket items. Once you complete the inventory, it is extremely important to safeguard the information. You can purchase a fire resistant box or safe; give the inventory to a relative or close friend; lock the document up in a safe place at work; give the list to an attorney or accountant; or put the inventory in a safe deposit box at your bank. In addition, make sure you update at least four times a year [source: California Department of Insurance].

The inventory of the library is finished. Let's move on to the living room!