Preparing for the BIG Bumps in the Road

Since this weekend is the tenth anniversary of Hurricane Katrina I thought I'd offer some advice about what to do before your belongings end up in a pile like this.

Remote Preparations:

Remote preparations are the steps you take to prepare for disaster before that disaster is even on the radar.  They may the the only preparations you have time to make for disasters like fires or earthquakes.

Insurance:

I hate paying insurance premiums but one thing I learned after Hurricane Katrina was that money made the recovery quicker and that insurance companies really do enforce the exclusions in their policies.  Homeowners' policies and standard renter's insurance do not pay for flood damages.  Mortgage companies require homes in flood zones to purchase flood insurance.  Many other people say that they do not need flood insurance--and they don't, until there is a flood.  My brother's girlfriend lived in a second floor apartment.  She did not "need" flood insurance until the waves of Katrina caused the building to collapse, and her belongings to wash out to sea.  If you are a homeowner, contact your insurance agent about a flood insurance policy.  The are issued by the federal government and cost the same no matter the sales agent.  Consider the cost, consider the risk and if you live anywhere near water, consider buying flood insurance.  

Make sure you know what your homeowner's policy covers and consider supplementary coverage, particularly if you don't have money for substantial out-of-pocket expenses.  On the Mississippi coast now, standard homeowner's policies do not cover wind damage.  I wonder whether wildfire or earthquakes are covered in California?  If you live there, make sure you know.  Make sure you know something about the insurance laws in your state.  While dry as dust your state's department of insurance website may have valuable information for you.  Talk to your agent and confirm your conversation via email--and keep the email.  You need to know under what conditions the insurance company can cancel your policy, and under what conditions it cannot.  Insurance won't pay for hurricane damage if there is a hurricane in the Gulf when you take out the policy, so along the Gulf Coast, don't plan on switching policies during hurricane season.  That's also something to keep in mind if you are buying a house.  In Louisiana, once you have had the policy for three years, your insurance company cannot cancel you except for non-payment, unless it quits writing insurance in the state.  If you have had it for less than three years, there are all sorts of reasons they can cancel, including wanting to lessen their exposure in the area.  Also state insurance departments may have approve before rates on old policies are raised, but not regarding new policies.  After Katrina, many people whose policies were less than three years old found themselves cancelled and forced to buy homeowners' insurance from the state insurer of last resort.  

All of that being said, remember that the purpose of insurance is to protect you from things you cannot afford, not to pay routine bills.  Raising deductibles can lower premiums to allow you to purchase coverage over other perils.  On the other hand, you may want to bet on the government coming to your aid in the case of a mass disaster, particularly one that could not be reasonably predicted.  Earthquake coverage is far more needed in California than in Louisiana and flood insurance is probably overkill in the desert far from the nearest stream.  

How would you describe this to an insurance adjuster?  Isn't it easier to just show a picture?

Photos and Inventories:

Go through your house and your belongings now.  Photograph as much as you can and upload those photos to the cloud.  Use Dropbox, Amazon, Snapfish, Google Pictures...it doesn't really matter.  Get them somewhere you can find them and somewhere that isn't dependent on your local computer.  If you have to make a claim, particularly for a total or almost total loss, you'll be glad you have them.  Scan receipts for major purchase and put them in the same place.  If they are in your filing cabinet, they won't do you any good in a disaster.

If you have family photos scanning at least some of them will protect them from being permanently lost as well.  Also scan important papers--again this may be the only copy you have left and even if it isn't official, having the copy makes it easier to get a new official copy.  Also, make sure the cloud has a list of your credit card numbers, bank account numbers, and copies of your insurance policies (all under secure passwords of course--and yes I know that nothing is absolute and if you are more comfortable spreading the information over several platforms, go for it.

Have a Plan:

Even if you don't want to decide to go to a certain place ahead of time, talk to your spouse and/or family and decide under what circumstances you will evacuate.  Do you stay until the last minute or are you the first out of town?  Does someone have to stay behind because of a job?  Have a packing list, and if there is something portable that it would break your heart to lose, make sure it is on the list.  I know people who now keep their family treasures in Rubbermaid totes which makes it easy to pick up the tote and throw it in the car.  Lesser treasures are also in totes which will hopefully be waterproof and survive a certain amount of water. Know what you will do with your pets.  You may have to pick up and leave quickly; having a plan lets you get the most done in the least time.

It Is Time to Leave

Whether you are evacuating voluntarily,  have been told to leave, or were forced out be fire, flood or building collapse, implement as much of your plan as you can; remembering that people are far more important than property, even sentimental property.  Get to a place of safety knowing that you will get through this.

If you have time, do something with the food in your refrigerator and freezer.  If you can't take it with you, either throw it away (outside) or put it all in garbage bags and tie them shut before returning them to the refrigerator or freezer.  Put a couple of ice cubes in a visible spot in both the freezer on top of the refrigerator and in your big freezer if you have one.  If you get back and the ice cubes are ok, then you know the food stayed cold and it is safe to remove from the garbage bags.  If it melted, and you decide to throw away the food, it is easy enough to haul the bags out.  If you've been gone and the power has been off for a couple of weeks, at least the stink goes out in one or two trips.  

Now It Is Over

Hopefully, you can go home, put your stuff away, fix some minor damage and go on with your life.  If not, here are the next steps:

People are more important than stuff.

I know you want to get back, I know you want to check on your house.  PLEASE wait until it is safe.  If you don't you put yourself and potential rescuers in danger.

Call your insurance company.

Here is where you have to know your policy.  My homeowner's policy now has a large hurricane deductible and requires me to pay the adjuster.  This means I want to see the house and get an "eyeball" estimate before I call my insurance company.  I don't want to pay an adjuster to look at a couple of broken windows.  On the other hand if you know your house had burned down, get on the phone with your insurance company as soon as possible; you want to give them every chance to do all the investigating they want.  Also, most homeowners policies include "ALE" additional living expenses.  If your home is damaged by a covered peril to the extent that you can't live there, they will pay for your hotel, apartment etc.  ALE usually kicks in if there is a mandatory evacuation.  

Allow yourself to mourn but don't focus on the loss.

I know it is easier said than done, but stuff is temporary, we can't take it with us.  

Don't be afraid to ask for help, or to accept it.

Americans are wonderful people, and in times of disaster they want to help.  Let friends and family and even strangers help.  If they ask  what they can do, or what you need, tell them.  If you have major losses and you don't think your insurance company is being fair with you, call a lawyer.  They will give you an initial consultation at no cost.  Ask what they think they can do for you and how much it will cost.  

While we all pray we never have to face either a natural or man-made disaster, proper planning can keep either from financially devastating you.

If you are interested, I've put up several posts this week on my other blog  This That and the Other Thing that show pictures of New Orleans and the Mississippi shortly after Katrina.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Saving Scotts*

Also linked to Final Friday Finance