Suze Orman Warns That Homeowners Are 'Setting Themselves Up for Heartache' if They Don't Make This Smart Insurance Move

Don't risk ending up with a financial disaster if something goes wrong at home.

Homeowners insurance can provide crucial protection. Not only does this type of coverage pay to repair or rebuild a property if something goes wrong, but it also generally covers the loss of personal possessions inside of the home.

Unfortunately, far too many homeowners have failed to take a crucial step to ensure they are fully compensated for all of their losses in the event of a fire or other covered disaster. Finance expert Suze Orman recently issued a warning about this issue on Facebook.

Here's what Suze Orman says many homeowners are missing

According to Suze Orman, homeowners are "setting themselves up for heartache" if they have not created an inventory of the possessions they keep in their home.

Orman's Facebook post warned that about half of all homeowners are lacking this type of inventory and she went on to explain why this is a huge problem. As she made clear, any home insurer will "want to see proof that you owned the items you claim for reimbursement."

See, if property in the home is destroyed, the insurer will pay for its replacement as long as you have the appropriate property damage coverage. But insurers don't just take a homeowners word for it when it comes to the possessions that were in the house and that insurance should pay for. As Orman said, homeowners will need to provide some evidence of all that was lost before an insurer will pay out.

While it would technically be possible to create an inventory after a disaster happens, Orman does not think this is a good approach.

"In a time of loss and upheaval, it will be hard to think through a complete list of everything you lost," she said. "The time to do that accounting is now, when you are calm, can carefully create a written and visual record of your home's possessions and gather all the receipts for major purchases."

How to create a home inventory

This advice from Orman is great and every property owner should heed her warning about the problems associated with not having a home inventory.

Unfortunately, it can seem complicated and daunting to actually make a complete accounting of everything you own. The good news is, there are tools to help out. Many insurers have forms on their websites such as home inventory checklists that property owners can use to simplify the process. There are also apps that allow for the creation of a digital inventory by recording a picture of items in the house and detailing the purchase date.

For large purchases, it's a good idea to make sure that all receipts are available as well. These can be digitized by taking a picture of them and keeping them in a special folder on a computer or in the cloud.

When making the inventory, it's important to be thorough and to include items in all of the structures in the home including, for example, tools in the shed. Starting with one room and working through the case to document items -- especially expensive ones -- can simplify the process as well.

Although this may seem like a huge hassle, as Orman said, doing it before a disaster strikes can save a lot of heartache later on.