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Calculating the Average Value of Personal Property for Insurance


Imagine that your home is destroyed in a fire. As you start the process to rebuild your life, a hard reality settles in: Your insurance coverage falls short of replacing your lost personal property. While this is an unfortunate situation, understanding how to calculate the average value of your possessions can help avoid such predicaments. Consulting a financial advisor can also help you understand how to value your personal property for insurance.

What Is Personal Property?

Personal property refers to any movable assets or belongings that you own. These can include furniture, electronics, clothing, jewelry and vehicles; which are different from real property like land and buildings.

As you can see from the examples above, personal property is commonly defined by its mobility. This is unlike real property, which is typically immobile and permanently affixed to a location. Personal property can be transported, bought, sold and transferred more easily.

Because of this movable characteristic, personal property can vary significantly in value, size and form, ranging from everyday household items to high-value assets like art collections.

You should also note that personal property can include intangible assets, like stocks, bonds, patents, trademarks and intellectual property.

How to Calculate the Value of Personal Property

The value of personal property can change over time. So it can be good practice to update your inventory and valuations periodically, especially for items that may appreciate in value or require specialized coverage. Here are eight common steps you can take to value your personal property:

  • Compile an inventory: Create a comprehensive inventory of all your personal property. This includes furniture, electronics, appliances, jewelry, artwork, clothing, and other personal items. You may find it helpful to categorize these for easier organization.
  • Determine the condition: Assess the condition of each item in your inventory. The value of personal property can vary greatly depending on factors like age, wear and tear, and maintenance. Be as accurate as possible in your assessment.
  • Research current market values: Determine the current market value of your personal property by researching various sources. Check online marketplaces, classified ads and price guides for similar items. Websites, like eBay or Craigslist, can provide insights into what similar items are selling for.
  • Consult appraisers: For high-value items like fine art, antiques, or collectibles, it may be smart to consult a professional appraiser. They can provide a more accurate assessment based on their expertise and knowledge of the market.
  • Consider depreciation: Keep in mind that most personal property depreciates over time. New items are generally worth more than older ones, and some items may depreciate faster than others. Take this into account when determining the value, especially for items like electronics or vehicles.
  • Document your findings: Record the value of each item in your inventory, along with any relevant notes that include the source of your valuation or the condition of the item. Keep this information well-organized for future reference.
  • Total the values: Sum up the values of all your personal property to get the total value of your belongings. This figure represents the estimated value of your personal property.
  • Adjust for tax or insurance purposes: Depending on why you’re calculating the value of your personal property, you may need to adjust the total value. For insurance purposes, you may want to insure items at their replacement cost. For tax purposes, local regulations and exemptions may apply.

Types of Insurance That May Cover Personal Property

A mother and daughter compiling an inventory to calculate the average value of personal property for insurance.

There are many different types of insurance that, if you file a claim, will need to decide how much your personal belongings are worth. Here are five of the most popular:

  • Homeowners: In the event that your home is destroyed or damaged in a fire, and your belongings are ruined, this coverage could help you recoup some money for your belongings. Your belongings may also be covered for theft or other events that can affect your home.
  • Renters: This coverage works the same way as homeowners insurance but it’s for those who are renting the home they live in instead of owning the property.
  • Auto: If your expensive belongings are destroyed or stolen from your vehicle then your auto insurance coverage might protect up to a certain amount of value.
  • Personal property insurance: This coverage is specifically for the coverage of your belongings that are damaged or stolen.
  • Flood insurance: Certain areas that are at risk for flooding may require protection against floods from rain or hurricanes. If your belongings are destroyed in a flood and you have this coverage, you might be able to get payment for your items.

Deciding on the right coverage can be complicated, therefore you should consider the specific coverage limits and variable rates.

Bottom Line

A couple reviewing the value of their  personal property with an insurance agent.

Peace of mind is priceless. But having an accurate value of your personal property can help protect you from loss, damage, or theft. As a best practice, keep an updated inventory of your personal property, get professional appraisals for high-value items, and review your insurance policies regularly. These actions will not guarantee an outcome but could significantly improve your chances of satisfactory results, in case of an unfortunate event.

Insurance Tips

  • A financial advisor can be invaluable during the process of getting value out of your property and making sure you have all the insurance coverage you need. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Not sure what type of insurance coverage you need? Consider each type of insurance and what it covers so that you know what to expect for your own situation.

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