Dear Paula C.:

If all my belongings were destroyed in a fire, how would the insurance company know what I owned so that it could replace them?

-- Puzzled Policyholder

Dear Puzzled:

Insurance companies aren't psychic - they don't know exactly what you own. But YOU should - for your own protection.

Here's a quick test: list the exact contents of your bedroom closet without peeking. Not so easy, is it?

If you were so unfortunate as to suffer a total loss - as in a fire - could you remember all those books and CDs on your shelves? How about the gadgets in your kitchen drawer? Or the dishes in your china cabinet? The list goes on . . . and on. Individually, these kinds of items may not cost a great deal, but they sure would add up if you had to replace them all. Your insurer would likely ask you to fill out a "proof of loss" form, which would require a complete list of what was lost or damaged, the value of each item, and the amount being claimed. That's why you need to keep an accurate record of what you own.

Some people keep track of their possessions by making a drawer-by-drawer, room-by-room video recording; others use a regular camera. An audiocassette recorder is useful for making a spoken list of collections like books, tools, stamps, and so on. Written or typed descriptions are another option. In all cases, be sure to include makes, models, serial numbers, or other identifying marks. And since most home policies today offer "replacement cost" on contents, it helps to have the most complete details possible so you can replace each item with one of "like kind and quality".

When it comes to higher-value items, like major appliances, art or furniture, the insurance company will ask to see a receipt or other proof of purchase.

Make sure you store your receipts and inventory records in a safety-deposit box or another secure location AWAY from your home. It's a good idea to keep negatives there too, so that the insurer could reproduce your precious photo albums if the originals were damaged.

Don't wait until you suffer a major loss to take inventory of your possessions, or you'll have to take that closet test - for starters - all over again!