You’ve probably read a lot about disaster preparedness. You know, have a flashlight and extra batteries. Here are some things we learned after a large property loss.
Before a Disaster:
Identify the most important things in your house — Try to keep them together, or keep a list of what they are and where they can be found in case of evacuation.
Keep the most important things safe. Fire safes are only rated for a very short period of time and sometimes at very low temperatures. The best way to keep things safe is to keep them in a safety deposit box (not at a neighbors… what if their house is destroyed too). You can also scan your documents and store them online. For photographs I use an online service called Snapfish (but there are others).
Inventory — I am not going to tell you that you need to inventory everything in your house. It is just not realistic. I simply use a video camera and walk slowly around the house and talk about the items. I even open drawers and talk about what’s inside. For my small house it only took about an hour. I have it stored in a safe deposit box. Just remember to update it regularly (I’m planning on every couple of years). If you ever need to prepare an inventory, it makes the process a lot easier.
Insurance — The most important thing to know, is that you probably don’t have enough insurance. Getting the right insurance isn’t that difficult. There are just a few things to know.
Type of insurance — There are three types of insurance. The one which pays the least is called “Actual Cash Value”. The most common is “Replacement” or “Extended Replacement”. The best is “Guaranteed Replacement”. A “forced policy” or “mortgage insurance” will usually only pay off your mortgage, not replace your house or your things.
A “replacement policy” does not guarantee that they will replace your house, but “guaranteed replacement” will. The only company I know of that sells “guaranteed replacement” in Southern California is AAA. Call them today. Membership not required.
Deductible — In order to keep your premiums down you should carry the highest deductible you can afford. You should never call your insurance company for a claim you could pay for yourself. The industry has a database (called CLUE) that they use to track claims (and sometimes even inquires about potential claims). Many people who’s houses didn’t burn, but were near the fire found themselves “non-renewed” after the fire because they had one or two small claims before the fire.
Amount of insurance — If you have “Guaranteed Replacement” policy, the limit on your policy isn’t as important. If you have a Replacement policy, it is very important. You should know that in January 2004 the estimate to rebuild mom’s 1,000SF home in San Bernardino CA was $201,000. What’s the limit on your policy?
Replacement value is more than you think. Do not use my mother’s numbers since your home is different, but rely on the insurance company to set the limit so they are responsible for the limit. Tell them you want as much insurance as would be necessary to rebuild your home if it burnt to the ground. Answer all of their questions honestly. They can use any white lie to invalidate your entire claim.
When you’re done, write to them and tell them how pleased you were that they spent the time to go over your entire situation to make sure you’re completely covered. Send it to the home office as well as the agent. Keep a copy of the letter in a safe deposit box, or scan it and store it online somewhere.
Payments — Unless you’re independently wealthy and can afford to loose your house, make sure your insurance is always paid. In fact, make sure you always pay it early. The insurance company can (and will) cancel you if you’re even a day late. Especially if you happen to have a claim during the time the payment was “in question”.
After a disaster:
Get educated. There is a lot to learn. Meet with fellow disaster survivors (if possible). If yours is the only loss then go to former survivors to learn the ropes. Many survivors are happy to tell you their story and to give advice. I even started a website for my mom’s house. If you’d like to read our story, go to http://momshouse.homestead.com. There are a couple of non-profit organizations who can also help with information such as CARe Inc. www.carehelp.org
Keep in touch with your community. There is power in numbers and in a major disaster you are not alone. You will be amazed at what the power of the community can accomplish that is practically impossible to do on your own.