Friday, November 9, 2007

Emergency & Financial Preparedness: Insurance is Vital

Will your insurance coverage be up to the job if disasters destroy your home? Ask yourself three questions now:
  • Do I have enough insurance to rebuild my home?
  • Do I have enough insurance to replace all of my possessions?
  • Do I have enough insurance to protect my assets in case of a lawsuit?"

Part of being prepared is to be able to answer that question with a resounding "yes!"

Homeowner's Insurance is designed to pay for damage to your home, its contents, protect you from financial liability if someone is injured on your property, and protects your possessions when you are away from home (i.e. stolen luggage, etc.)

Most homeowner's policies cover damage to the structure of your home, as well as personal property caused by many disasters. Fire and smoke damage, lightning, hail, explosion and theft are almost always covered. Although most homeowner insurance policies are standardized, you should examine all policies carefully and ask lots of questions before feeling comfortable with your coverage.

Flood, earthquake and sinkhole damage are almost never covered in a standard policy and need to be insured separately. Home offices, collectibles, jewelry and antiques may also need separate coverage. Homeowner's insurance only covers the structure of your home, not the land.

Two Methods of Determining Loss
Insurance companies employ two methods to determine the value of a loss--actual cash value and replacement cost.

Actual cash value is the cost of replacing damaged or destroyed property with comparable new property minus depreciation.

Replacement coverage is the cost of replacing an item with an item of the same kind and quality, with no consideration for depreciation.

Replacement value is the better of the two types of coverage because it will guarantee replacement. If your property is several years old and you have a cash value policy, your possessions may be worth nothing due to depreciation, and therefore, you are left without. If your policy does not already include replacement coverage, you can add this to your policy for an increase in premium. It may be well worth the additional premium to include this coverage.

If you are not yet a homeowner, make sure to purchase renters' insurance. This type of insurance can also protect you in case of theft, vandalism, natural disaster and liability for injury in your home or apartment. Rental properties often become victim to looting and vandalism after a disaster.

Ask Lots of Questions
An insurance policy is a legal contract that may be loaded with technical terms and hard to understand. Read it before you sign and ask if you have a question. Be very specific in the questions you ask and try to get all answers in writing. For example:
  1. Who is covered? If a volunteer is injured while helping to clean up after a hurricane, is he covered? How much of his medical bill would be covered?
  2. What is covered? Is my car covered if a tree falls on it when it is parked in the driveway? Is it covered if it is in the garage? Is the cost of tree removal covered if the tree does no damage?
  3. Am I covered for direct losses due to fire, lightning, tornadoes, windstorms, ice storms, hail, explosions, smoke, terrorism, vandalism and theft?
  4. Are my jewelry and antiques covered?
  5. What happens if I decide not to rebuild my home? Can I rebuild a different house plan--larger or smaller than my present home?
  6. If a pipe bursts and water flows all over my floors, am I covered? What if the dishwasher leaks and ruins the floor? Am I covered?
  7. What if water seeps into my basement from the ground due to flooding or sprinklers? Am I covered?
  8. If a storm causes a power outage and all the food in my refrigerator or freezer is spoiled and must be thrown out, can I make a claim?
  9. Are children and their possessions covered when they are away at college?
  10. Does my homeowner policy cover the loss if something is stolen out of my car?
  11. Is my boat covered if it is stolen? Am I covered if there is a boating accident and I am sued?
  12. Am I covered if I need to rebuild my home to a new, stricter building code?
  13. Exactly what is not covered? Have you ever heard that an "act of God" is not covered? What is an "act of God?"
  14. What personal expenses are covered after a disaster? If I can't inhabit my home because of a fire, will the insurance policy pay the hotel bills? For how long? Car rentals? For how long? Meals? For how long? Medications, clothing replacement, school supplies?
  15. When can you begin collecting the settlement money after a loss? Do you have to pay first and then submit receipts for reimbursement?
  16. Will they charge for inspector to come out and inspect the damage?
  17. How do you report a claim? Does your insurance company have a 24-hour hotline? In the case of a disaster, always call immediately after a disaster strikes. In the case of a widespread disaster, claims will be handled in the order they are received. If no one answers, leave a message. Always keep several phone numbers for your insurance company and agent in your 72-hour kit.
  18. What is the premium? How often is it due? Is there are a grace period? When will it increase? Will it increase every time I make a claim--to the point that I won't want to make a claim because of penalization?
  19. How much is my deductible?
  20. Does the policy cover actual cash value or replacement cost?

Obviously, these aren't all the questions you will need to ask, but they should help get you thinking about concerns specific to your situation.

Source: Adapted from "Insurance: Part of Being Prepared" by Carolyn Nicolaysen, Meridian Magazine

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Preparedness Quotes

"When faced with the choice to buy, consume, or engage in worldly things and activities, we all need to learn to say to one another, 'We can’t afford it, even though we want it!' or 'We can afford it, but we don’t need it—and we really don’t even want it!'" - Elder Robert D. Hales, April 2009 General Conference

"Many areas of the world have experienced difficult economic times. Businesses have failed, jobs have been lost, and investments have been jeopardized. We must make certain that those for whom we share responsibility do not go hungry or unclothed or unsheltered. When the priesthood of this Church works together as one in meeting these vexing conditions, near miracles take place.

"We urge all Latter-day Saints to be prudent in their planning, to be conservative in their living, and to avoid excessive or unnecessary debt."
- President Thomas S. Monson, October 2008 Priesthood Session, General Conference

"Avoid the philosophy that yesterday's luxuries have become today's necessities. They aren't necessities until we make them so. Many enter into long-term debt only to find that changes occur; people become ill or incapacitated, companies fail or downsize, jobs are lost, natural disasters befall us. For many reasons, payments on large amounts of debt can no longer be made. Our debt becomes as a Damocles sword hanging over our heads and threatening to destroy us."
- President Thomas S. Monson, April 2006 General Conference

“We have built grain storage and storehouses and stocked them with the necessities of life in the event of a disaster. But the real storehouse is the family storeroom. In words of revelation the Lord has said, ‘Organize yourselves; prepare every needful thing’ (D&C 109:8.)”
President Gordon B. Hinckley

"We need to make both temporal and spiritual preparation for the events prophesied at the time of the Second Coming. And the preparation most likely to be neglected is the one less visible and more difficult--the spiritual. A 72-hour kit of temporal supplies may prove valuable for earthly challenges, but, as the foolish virgins learned to their sorrow, a 24-hour kit of spiritual preparation is of greater and more enduring value.

"We are living in the prophesied time 'when peace shall be taken from the earth' (D&C 1:35,) when 'all things shall be in commotion' and 'men's hearts shall fail them' (D&C 88:91.) There are many temporal causes of commotion, including wars and natural disasters, but an even greater cause of current 'commotion' is spiritual." Elder Dallin H. Oaks

“Every father and mother are the family’s store keepers. They should store whatever their family would like to have in case of an emergency…(and) God will sustain us through our trials.” President James E. Faust

“We live in a most exciting and challenging period in human history. As technology sweeps through every facet of our lives, changes are occurring so rapidly that it can be difficult for us to keep our lives in balance. To maintain some semblance of stability in our lives, it is essential that we plan for our future. I believe it is time, and perhaps with some urgency, to review the counsel we have received in dealing with our personal and family preparedness. We want to be found with oil in our lamps sufficient to endure to the end.”- Elder L. Tom Perry, Ensign, Nov. 1995

"Many more people could ride out the storm-tossed waves in their economic lives if they had their year's supply of food. . . and were debt-free. Today we find that many have followed this counsel in reverse: they have at least a year's supply of debt and are food free." President Thomas S. Monson

"Just as it is important to prepare ourselves spiritually, we must also prepare ourselves for our temporal needs. … We have been instructed for years to follow at least four requirements in preparing for that which is to come.

“First, gain an adequate education. Learn a trade or a profession to enable you to obtain steady employment that will provide remuneration sufficient to care for yourself and your family. …

“Second, live strictly within your income and save something for a rainy day. Incorporate in your lives the discipline of budgeting that which the Lord has blessed you with. As regularly as you pay your tithing, set aside an amount needed for future family requirements. …

“Third, avoid excessive debt. Necessary debt should be incurred only after careful, thoughtful prayer and after obtaining the best possible advice. We need the discipline to stay well within our ability to pay. …

“Fourth, acquire and store a reserve of food and supplies that will sustain life [if local laws permit such storage]. Obtain clothing and build a savings account on a sensible, well-planned basis that can serve well in times of emergency. As long as I can remember, we have been taught to prepare for the future and to obtain a year’s supply of necessities. I would guess that the years of plenty have almost universally caused us to set aside this counsel. I believe the time to disregard this counsel is over. With events in the world today, it must be considered with all seriousness.” - Elder L. Tom Perry, October 1995 General Conference

“Maintain a year's supply. The Lord has urged that his people save for the rainy days, prepare for the difficult times, and put away for emergencies, a year's supply or more of bare necessities so that when comes the flood, the earthquake, the famine, the hurricane, the storms of life, our families can be sustained through the dark days. How many of us have complied with this? We strive with the Lord, finding many excuses: We do not have room for storage. The food spoils. We do not have the funds to do it. We do not like these common foods. It is not needed -- there will always be someone to help in trouble. The government will come to the rescue. And some intend to obey but procrastinate.” - The Teachings of Spencer W. Kimball, p.375

“All too often a family's spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress” - Elder Joseph B. Wirthlin

"Be prepared in all things against the day when tribulations and desolations are sent forth upon the wicked." D&C 29:8

"Too often we bask in our comfortable complacency and rationalize that the ravages of war, economic disaster, famine, and earthquake cannot happen here. Those who believe this are either not aquainted with the revelations of the Lord, or they do not believe them." President Ezra Taft Benson

"Fear not little flock; do good; let earth and hell combine against you, for if ye are built upon my rock, they cannot prevail. . .Look unto me in every thought; doubt not, fear not." D&C 6:34, 36

"I believe that the Ten Virgins represent the people of the Church of Jesus Christ. . . They (five foolish) had the saving, exalting gospel, but it had not been made the center of their lives. They knew the way but gave only a small measure of loyalty and devotion.

"The foolish asked the others to share their oil, but spiritual preparedness cannot be shared in an instant. . . . This was not selfishness or unkindness. The kind of oil that is needed to illuminate the way and light up the darkness is not shareable. . . . In our lives the oil of preparedness is accumulated drop by drop in righteous living." - President Spencer W. Kimball

“We encourage families to have on hand this year’s supply; we say it over and over and over and repeat over and over the scripture of the Lord where he says, “Why call ye me, Lord, Lord and do not the things which I say?” How empty it is as they put their spirituality, so-called, into action and call him by his important names, but fail to do the things which he says." - President Spencer W. Kimball"/>


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