When Disaster Strikes

Over the past several months I’ve truly stopped counting the number of emails, text messages, phone calls and general comments received relating to the recent unanticipated and unprecedented Natural Disasters occurring around the US.  All coming from someone affected directly or indirectly, who also knows something about Jules.  One quote pretty much summed it up for most people.  This comment came from a friend who I had spoken to a year ago about what we were planning for Jules.  When we talked, to be completely honest, he just didn’t get it.  Nothing really stood out to him as a must have type of feature/benefit.  A couple weeks ago I heard from this person, tragically as he combed through the ash of his now completely destroyed Napa home “Kent, I totally get Jules now!”.  That’s all he said at the time.  We’ve since had a chance to sit down together, and he explained to me how he so wished Jules had been ready in time before Disaster struck him and his family.

Purpose of this post:
In this post, I will begin to break down many of the issues I’m hearing from people that relate to recovering in the aftermath of these natural disasters as well as other unexpected tragedies that can strike at any time.  I’m sure there are many other issues people are running into that may be less obvious, but still very important that I will continue to hear about and I will continue to share them here and provide ideas for what can and should be done now to help recover should another one strike.

Big Problems in life:
Let’s first make a change in terminology.  Let’s get away from calling these life events “Tragedies” or “Disasters” and let’s just label them “Big Problems”.  Sounds a little less dramatic.  Big problems in life come in many forms.  Not just from Natural Disasters like Flooding, Fire, Wind, Earthquake.  They also come in the form of major theft or damage to valuable personal property, identity theft, personal injury, major health conditions, legal problems, personal financial problems, etc.  The list goes on and on.
At this point in the post let me be very clear about a few things.  I’m by no means advocating for continual worrying about what might and could happen in life.  Nor am I advocating for trying to anticipate everything and anything that might happen and have a specific plan for that event when it occurs.  Life is just simply way to short and unpredictable for this kind of thinking and behavior.  Lastly, even if you follow all the following suggestions and take advantage of every feature Jules has to offer you still will not be completely insulated from the impacts of sudden and unexpected big problems.  It’s just not possible.
Having said all this there are numerous fundamental things you can do now that will ease the pain and aid in the recovery, in the event any of these big problems occur.  I will attempt to group them in logical categories:

  • Record keeping
  • Risk assessment and planning (aka Insurance)
  • Process to update both items above on a regular interval
  • Simple action plan in the event of a Big Problem occurring unexpectedly.

Now let’s get to it!

Record Keeping:
Fundamental to being able to minimize the damage and rapidly recover from any one of these big problems is to have good, up to date and accurate records of the state your life was in just prior to the big problem event occurring.  As you think of a backup of your computer in case the MS Windows Blue Screen of death appears, you must have the equivalent when it comes to everything else in your life.  This is also your opportunity to take advantage of living in the digital age and make this snap shot a digital snap shot.  Store it securely in the “cloud”, where it won’t get stolen, burned, flooded or blown away.  The following is a starter list of the types of things that should be stored in your digital vault:

  • Any and all legally signed and executed documents.  Make sure you create an image of the full document and all signature pages.  Don’t just upload the original Word version with no signatures and don’t just upload an image of the signature pages without the agreement itself.  You will be surprised how many of these there are.  Get them all.  In particular be sure you have all your estate documents in good order.  Wills, Trusts, etc.  Make sure they’re current and signed (including notary where required by law).
  • Any and all identification documents such as Birth Certificate, marriage certificates, death certificates and all government issued ID documents (i.e. passport, Driving license, military ID, etc.).  These all become much easier to replace if you have an image of the original.
  • Ownership title documents.  Cars, houses, etc.
  • Inventory of all high value possessions.  Include details like make/model/Serial number where available and appropriate.  Image of the item, purchase records (receipt), appraisals, authenticity certificate, etc.  Very important to understand, that if something is lost, stolen or destroyed, the burden to prove you owned it and what it is worth is on you when filing an insurance claim for recovery.  The more proof you can provide the better off you will be and the more likely you will reach a fair settlement.
  • Memorabilia – This one has the least economic value but the highest personal value.  We’re talking about memories here.  Take images of as many items you plan on keeping for a lifetime as you possibly can.  Items that “when they’re gone they’re gone”.  Can’t be replaced.  Taking images can’t replace the item.  It can’t bring it back if it’s lost or destroyed, but it can preserve the memory.  Big one.

Risk assessment and planning (aka Insurance)
This process starts with asking yourself what are the biggest risks you face.  I call this a risk inventory.  Following are some examples but not intended to be comprehensive:

  • Natural disasters based on where you live.  With climate change, these are changing.  Don’t just go by what has or hasn’t happened in the last 100 years.
  • Risk of property theft, loss or damage.  Are you careful when it comes to leaving gas burners on or irons on.  How often does your iPhone screen crack?
  • Liability risk – Teenage drivers in the house.  I realize all of you have the perfect teenagers.  I know I do.  Just in case your perfect teenager crashes the car and significant property damage or death is a result, recognize that while your teenagers and young adults are still carried on your insurance policies, their liability rolls up to you.
  • Professional risk.  If you’re a doctor or lawyer you have malpractice liability risk as an example.  If you’re a professional athlete you have career ending injury risk.  Etc.
  • Lifestyle risk.  Are you simply a risk taker in general?  Do you race dirt bikes as a hobby?  Do you ski only double black diamonds?  Skydiving?  Scuba diving? rock climbing?  You get the idea.

If after completing the risk inventory you have an “oh my god” moment, this might be a good time to make some changes to your risk profile before you go on to the next step.  Some of this is well within your control.

Net Worth Estimation
The next step is a rough estimate of your net worth (see earlier Blog regarding a detailed approach).  Pretty simple here.  If you don’t know what your worth and what comprises that worth, you will not be able to determine how to protect it.  Your net worth is simply calculated by adding up the value of everything you own and subtracting the value of everything you owe (mortgage, car loans, student loans, taxes, etc.).

Paying to limit your risk exposure
This is about insurance.  How much are you willing to pay every month/year to know that you have limited financial risk exposure.  You can insure nothing and simply “self-insure” assuming that the premiums you save by not insuring anything will aggregate over time and if you do lose something or break something then you can pay for it out of these accumulated funds.  You can insure “everything” to its maximum replacement cost.  This is the other end of the spectrum.  Very expensive to do this, but you will sleep solidly at night with the knowledge that “you’re covered” regardless of what happens.  99.9% of the population falls somewhere in between.  Where you fall in the spectrum is more of an emotional “feel” based analysis than a quantitative analytical kind of decision.  BUT, don’t make it without all the facts.  Be sure you really understand that with every decision you make in terms of how much to insure what your economic outcome will truly be under numerous event outcomes.  Don’t stick your head in the sand on this!!  Yes, it will likely still be an emotional decision where you want to be on this spectrum but make it knowing where you are placing yourself.  The following lists some types of insurance commonly available:

  • Property insurance – Insure your home and its contents.  Normally required by the mortgage lender.  Includes some limited liability resulting from events related to the home.  See previous blog for details on what to look for here.
  • Auto insurance – Insure the value of your car.  Includes some limited liability for events relating to the car.  Also required by any auto loan lender.
  • Life insurance – Insure against losing your life.
  • Additional liability (also known as umbrella) – Insures against liability claims made against you above and beyond the limits in your homeowners and auto policies.
  • Medical, Dental, Vision and other health care related insurance.  Insures against the cost of staying healthy.
  • State, local and federal disaster relief funds.  This one is a true wildcard in every sense of the word.  Yes these funds in theory, exist.  Would I want to count on them in the event of a natural disaster – NO.  I would suggest looking on this source of “insurance” as true upside surprise only.

The key point I’m making here is to determine where on the risk/cost/insurance spectrum you fall and make sure you take out the insurance that really places you on that point.  This can be much more complicated than you might think.  The insurance industry for 100’s of years has worked hard to make this as complicated as they can get away with for the average consumer.  In my attempt, not to be cynical I will stop short of telling you why they do this.  The insurance industry is so heavily regulated it’s not likely you will find material price differences between carriers for the same coverage.  It’s much more likely each one will package them very differently so as to make it almost impossible for you to compare against the competition.  This will be a key area of focus for Jules, to help you figure this out.

Process to update both items above on a regular interval
All of the above really does you very little good if you don’t invest time keeping it all current.  Let’s face it, as time goes on things change in your life.  Some big and obvious ones like adding a new child to the family, buying a new house, moving to a new part of the country, etc..  Some changes are not as obvious.  When your kids become teenagers, and start driving.  When the kids truly move out on their own and have their own insurance.  You can inherit wealth from deceased parents or grandparents.  Someone in the family comes down with a terrible illness and it becomes very expensive.  Your aging parent needs to move into a full care facility.  A member of the family runs into severe financial problems and you become the safety net.  Or, simply your attitude towards certain things changes over time.
Going back as a result of these and many more changes and reviewing your overall risk management plan is crucial to avoid big surprises when the big problems actually happen.

Simple action plan in the event of a Big Problem occurring unexpectedly
For the obvious high-risk events have a simple plan in place to “get through it” and limit the immediate damage:

  • Be sure you have supplies to survive the appropriate amount of time (based on emergency)
  • Be sure you have a communication plan while the event takes place and shortly thereafter.  Includes a place to meet.
  • Have this all agreed and understood by immediate family and friends.
  • Know where your gas shutoff is and how to shut it off.  If a special tool is required you must know where it is.
  • Know where your water shutoff is and how to shut it off.  If a special tool is required you must know where it is.

Jules touches just about every aspect of what’s described above and oh, by the way, this is only about 10% of everything Jules can do to help you manage your personal life and everything that is a part of it.