Prepare For Emergencies
By Judy McKenna, Ph.D., CFP
Re-printed with Permission
Many of us contributed funds tohelp those who suffered great loss from hurricane Katrina. We may not be thinking, however, abouttaking care of ourselves in the event a disaster would strike where welive. Yet, Katrina should be awakeup call to us to take stock of what we have to help us recover fromdevastating and unexpected occurrences.
The most important step you cantake is to make a complete inventory of what you have. Give a copy of your inventory to afamily member or friend who lives in another geographical area. Your inventory list should include itemand description, make and model, and when purchased. For example, 27" color television, Sony, serial number 02387,purchased in 2001.
Take photos of special andexpensive items and videotape each room. More complete guidelines for completing an inventory can be found at theRocky Mountain Insurance Information Association non-profit Web site: www.rmiia.org. The RMIIA site also connects you to the InsuranceInformation Institute's site, which has free software for documenting yourpossessions. This inventory willsupport your claims in the event of a flood, fire, tornado, other naturaldisasters, and theft.
Did you realize that yourhomeowner's insurance does not protect you against damage from floods? Flood insurance was established by thefederal government in 1968. Theprogram is administered by the Federal Insurance Administration (FIA). The flood insurance program is totallyself-supported. All dollars paidby the flood insurance program come from policyholder premiums.
In order for you to buy floodinsurance, your community must be accepted into the flood program. Residents, both homeowners and renters,in qualified communities can purchase flood insurance from any licensedinsurance agent who is writing flood insurance under arrangements with the FIAin the United States.
All premiums, policy wording, andrules are the same nationwide. With one exception, flood insurance does not provide replacement costcoverage on lost property. Thismeans that at the time of loss, the value of the property or item will be itscurrent replacement cost, minus a certain amount for depreciation. And here's a surprise: No contentsstored in a basement are covered by flood insurance. If you decide this is a good time to shop for homeowner'sinsurance coverage, be sure you are comparing similar policies. Ask how much the deductible is, whichperils are covered, how much liability insurance is included, and if thecoverage is for replacement cost value.
Ask if you are eligible for anydiscounts. Even if you don'tswitch insurers, consider increasing your deductible to $1,000 so that you arenot filing small claims. If youfile small claims, your insurance premiums are likely to be increased, and yourinsurance company may cancel your insurance all together.