Contents inventory and valuation methodology

A contents inventory is built room by room rather than as a single undifferentiated list, because that is how a policyholder actually experiences and can verify their own property, and because it lets a reviewer check completeness against the photographed or walked spaces. For each item, the inventory records a description specific enough to identify a replacement (brand and model where known, otherwise material and type), quantity, approximate age or purchase date, condition immediately before the loss, and the source used to establish its replacement price.

Age and condition matter even when the policy pays replacement cost, because they determine whether an item is a like-kind match to its replacement and because they are required inputs if the claim later needs an actual cash value figure — for a sublimited category, a partial payment, or a jurisdiction where ACV is the default basis. Recording them at inventory time, while the policyholder can still describe the item accurately, is far more reliable than reconstructing them later from memory.

A consistent unit of measure and quantity matters just as much for contents as it does for a building line item: 'linens, various' is not a quantity, but 'queen sheet set, 2, purchased approx. 2024' is one. The same discipline that applies to counting square footage of flooring applies to counting discrete household items — undercounting or bundling dissimilar items together makes the total impossible to check later.

Replacement cost value (RCV) is the cost to buy a new item of similar kind and quality at current prices, without a deduction for the age or wear of the damaged item. Actual cash value (ACV) is replacement cost minus depreciation — a reduction that reflects the item's age, condition, and remaining useful life at the time of loss. Most contents policies pay ACV first and release the difference (the recoverable depreciation) once the policyholder actually replaces the item and submits proof of the purchase, within a time limit stated in the policy.

Some items depreciate in a way most people find intuitive — electronics, appliances, clothing — while others, if they hold or gain value with age, may not depreciate on a straight schedule at all; how a specific category is treated is set by the policy and, for higher-value items, by any applicable schedule or endorsement, not by a single universal rule.

The depreciation method applied to a given item — straight-line over an estimated useful life, or a published depreciation schedule specific to that category of property — should be recorded alongside the resulting percentage, not just the final dollar figure. A reviewer checking an ACV payment needs to see the method, the useful-life assumption, and the age used, in the same place as the number itself.

Unscheduled personal property is covered under the policy's blanket contents limit, without any single item being individually listed or valued in advance. Scheduled personal property — commonly jewelry, watches, fine art, furs, or collectibles — is individually listed on the policy, usually supported by an appraisal, and insured for a specific agreed amount, which avoids both underinsurance and a category sublimit for that specific item.

A sublimit caps payment for an entire category, even for unscheduled items within it, well below the overall contents limit — for example, a fixed dollar cap on jewelry, on business property kept in a home, or on cash and securities. An inventory has to flag which items fall into a sublimited category during intake, because a high-value item can be fully documented and still be capped by the category limit rather than paid at its full value.

Because sublimits are set per policy and vary by state and carrier, an inventory should record the specific sublimit that applies to a flagged category, not just the fact that a limit exists, so the eventual payment calculation can be checked against the correct figure rather than a general assumption about how these limits usually work.

Declaring an item non-salvageable — that it cannot reasonably be cleaned, repaired, or restored and must be treated as a total loss — is a determination that needs its own documented basis: what specifically failed (structural damage, contamination that cannot be safely remediated, odor that professional cleaning did not resolve), and, where applicable, a note of the professional or standard consulted. A bare non-salvageable label without that basis is one of the fastest things a reviewer challenges, because it directly increases the payout without an inspection trail behind it.

Every inventoried item should carry at least one photo showing its condition at the time of loss, and a receipt, purchase record, or comparable retail listing supporting its stated replacement price where one is available. Where no receipt exists, the source of the price estimate — a specific retailer listing, a comparable model, or a professional appraisal — should be recorded as explicitly as if a receipt did exist, so the number is traceable rather than asserted.

A household contents claim includes a five-year-old sofa, originally purchased for $2,400, with an estimated 10-year useful life and no receipt retained; a comparable current model from a similar retailer prices at $2,800.

Contents itemization by room is coming soon in PaxExact — the platform can store items per room, but there is no screen for entering them in the application yet. Contents valuation, depreciation, and RCV/ACV calculation are planned but not yet built; totals today are reported as replacement-cost-only and say so explicitly, rather than presenting a depreciated figure the platform has not actually computed.