It’s Wise to Plan for the Unexpected Sometimes the unexpected happens. What if your house and personal possessions suddenly were destroyed by fire, weather or other disaster? How much would your insurance pay?

If you need time to think about it, you probably should address this issue.

Ralph Freibert led a privileged life in an upscale New Orleans neighborhood adjacent to the now famous 17th Street Canal. When the levee broke, he didn't completely understand what was happening or comprehend the magnitude of the growing devastation. Things changed by the minute, and he and his family had to adjust quickly.

Ralph's children relocated to Texas, then Atlanta, and finally to a school in the Northeast. The kids were not allowed to attend school at first because they lost their immunization papers, and there was no place to get copies. The only way the school would allow the children to attend classes was to consider the family as homeless people. He and his wife cried when they heard this news …how quickly their lives had changed.

Natural and man-made disasters, like the hurricane and flooding in New Orleans, can happen anywhere. If you are like most people, you have spent little or no time preparing an emergency plan. The reality is this can happen to you.

How can you prepare for the unexpected? Here are some steps to consider.

■ Review your property and casualty insurance. Read your policy to understand what it does and does not cover. Consider the improvements you have made to the house. What would rebuilding, or replacing items, cost? Is your current coverage enough? Most people find out too late that they failed to increase coverage to keep up with improvements.

■ Find a knowledgeable insurance agent. Have you ever met your property casualty agent? Many people think their agent will give them the best coverage. Unfortunately, as in any profession, there are insurance agents with whom you really don't want to deal. Find one who is knowledgeable, proactive and ethical, and will always place you and your family's interests first.

■ Make sure you have enough savings reserves. “Three months of monthly expenses is not enough  have at least six months,” says Freibert. "Many places only accept cash; you would be surprised how fast you can spend it."

■ Inventory all your assets and property. Sit down and make a list of everything in each room: furniture, carpeting, light fixtures, window coverings, appliances, personal items, paintings etc. Better yet, go through each room with a video camera and record a narrative. Keep the tape in a secure location outside of your home.

Also, consider storing important documents including wills, tax returns, birth certificates and immunization records “inside” an online vault. The right service will allow you to access these documents immediately, and most importantly, will have sophisticated security systems to alleviate concerns that others could obtain access to your confidential information

Fortunately, Ralph kept great records, stored them outside his home, and fared better than most of his neighbors. Still, he could and would have purchased additional flood coverage if he had known about that option. In retrospect, the move would have saved him a substantial amount of money.

Before Hurricane Katrina, Ralph, like many people, was never satisfied or really appreciated the things he owned or accomplished. After Katrina, he and his family and many others have had to rethink their entire life plan.

Sometimes the unexpected happens.

Labels: Financial planning

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