Posted by: Robin Gronsky | January 8, 2013

Why You Should Have a Current Inventory of Your Business and Home Assets

If you were one of the lucky ones and not directly hit by Hurricane Sandy, you are thinking “why would I need an inventory of my business and home assets?”  Although a hurricane is an unusual weather event, there are other reasons to know what you own in your business and your home and how much what you own is worth.

Much more common than hurricanes are small floods (maybe due to an overflowing toilet or a burst pipe) or tree damage from a windstorm (we’ve been having more of those in the past 5 years) or a small fire.  Each of these occurrences can damage business assets, such as computers, inventory, files, and equipment.  Or, if they occur in your home, you can lose your carpets, furniture, electronics and appliances.  If you are the victim of theft, you can lose your cash and jewelry.

By knowing exactly what you have, you can know how much insurance to buy for your business and/or your home.  Although you may buy property and casualty insurance for your home based on the replacement cost of rebuilding your home, you may also need a rider for your jewelry and other expensive possessions that may not be covered by your main policy.  In the event that you need to submit a claim to the insurance company, you need to be able to give them a list of what was damaged or stolen and how much the items were worth.  Additionally, you are also buying liability insurance in case you get sued.  The amount of liability insurance you should buy should have some connection to how much you are worth, which includes the contents of your home as well as the value of your bank accounts, stocks, bond and mutual funds, and other investments.

For your business, you need to know how much liability insurance and errors and omissions insurance to buy based on the assets of the business.  You should also have a sense of the net worth of your business in case you need to unexpectedly sell your business.  The net worth is calculated by subtracting your business’ liabilities from its total assets.

Finally, knowing the total value of what you own lets you know how much asset protection planning and estate planning you need to do.  You may need to move assets around to protect your family in the event of a lawsuit or you unexpectedly dying.  By inventorying what you have, you can plan before a crisis hits for the best way to keep your family from a devastating loss.

There are online programs, apps or pen and paper for you to keep your inventory.  Make photos or a video of what your family and your business own and keep the list and photos or video of your assets in a different location from your home or office/store.  If you are too busy to do it yourself, ask your spouse, your kids, or hire a college student to help.  You probably won’t have any advance warning of when you will need this inventory, so do it now.

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