Be prepared: It reduces the stress of disaster

RICHARD MEADOWS
Last updated 05:00 08/11/2012

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If your house is burgled, flooded, shaken by an earthquake, or burned down, life will be stressful for a while.

All your worldly goods are destroyed, and you're left wondering how to pick up the pieces. Insurance claims can drag on and add to your misery.

You can't fight fate. But you can at least be prepared to make sure the recovery process goes as smoothly and quickly as possible.

The following five steps for disaster-proofing your home mostly become painfully obvious only with the benefit of hindsight.

Spare yourself from that awful sinking feeling by checking them off right now:

1. Cover up

Getting house and contents insurance cover is a no-brainer for home owners. But one group of people tend to slip through the cracks - tenants.

"A separate contents policy should be taken out by the renter, as you will not be covered under the landlord's policy," says Mark Reid, general manager of insurance brokerage Abbott Group.

He says as well as protecting your own stuff, the contents policy provides some liability cover if you accidentally damage the landlord's property.

Renter's insurance starts from around $300. Premiums vary depending on the value of your possessions and the excess you're willing to pay.

2. Create a paper trail

Imagine the heartache of having all your expensive gold jewellery stolen, most of it wedding presents.

Now add to that the indignity of your insurance claim being rejected, despite your photos of yourself wearing the jewellery and your extremely detailed valuation the very next day.

That's what happened to one unfortunate woman. She complained to the insurance and savings ombudsman, but the ombudsman agreed with the insurer's decision and suggested she should have had a valuation done beforehand.

The onus of proof when you make a claim is on you, not the insurance company, which is fair.

But it does mean you have to be careful about keeping documentation.

"If you have anything of value, keep the receipts," says Reid.

There's no set dollar threshold for which ones you should hang on to, he says - each insurer will have different guidelines.

You can hardly ask for the receipt if your mum passes down an heirloom necklace or your beau buys you a flash ring.

But you can get an independent valuation. Each insurer also sets different limits for jewellery, Reid says:

"What this means is that any type of jewellery with a value over that specified item limit needs to be valued, and specifically noted on the policy."

Depending on the policy, there may be restrictions for other "specified items", so get them valued too.

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3. Make a home video

You'd need the memory of an elephant to itemise the accumulated junk of a lifetime found in any average house.

But if you can't remember it, you can't make a claim for it.

State's general manager of claims Brendan McGillicuddy suggests strolling through the house with a video camera.

"Pan and scan each room, take photos of the more unique items then store it round at mum and dad's place, or friends' family," he says.

"In the worst-case scenario, it's very easy to go back and work through, and get the claim settled."

Then you can take detailed photographs of jewellery and unique items, all of which will act as evidence and help streamline the claims process.

4. Protect valuable documents

It's no good painstakingly collecting all your receipts and valuations in a filing cabinet if they become a waterlogged, illegible pulp when the basement floods. You need to protect certificates of ownership, identification, and mortgage deeds too.

It's best to store important documents in two locations - you could lodge them with a bank, perhaps your lawyer, or at a trusted relative's house.

Otherwise you could consider buying a fire-proof, watertight safe - actually quite cheap at hardware stores, from around $150. They're good for up to one to two hours in intense heat, and could make all the difference to getting your financial affairs in order.

5. Back up your computer

Paralympian swimming champion Cameron Leslie almost lost one of his gold medals when his car was broken into last year.

Instead, the thieves stole a bag with his laptop, a loss which came at the worst possible time.

"When you're a month out from finishing uni, there's some pretty big assignments about to be handed in," says Leslie.

It wasn't the value of the computer that bugged him so much as the loss of all his hard work, which had to be painstakingly recreated.

These days Leslie is diligent about emailing work-in-progress to himself in the event of another catastrophe.

Whether it's theft, fire or mechanical breakdown, you could lose the whole lot in one fell swoop - treasured photos, important business accounts and media collections.

That means you need to save your crucial files to a back-up drive. External hard drives or USB stick and pen drives are cheap as chips these days.

NetSafe executive director Martin Cocker has three golden rules for data protection.

First, make sure the backup will keep all your databases intact. "You can't just assume that a quick drag-and-drop of some files will have definitively copied everything that you want."

Next, it has to be done regularly. "You think about a business - the most critical stuff is the files you've updated in the last week."

Lastly, you have to keep the backup in a different location. There's no point having a backup hard drive siting next to your PC if they're both melted to slag in a house fire.

My father has a unique solution: he places a USB stick into a tightly sealed peanut-butter jar and buries it out on the property.

The tricky bit is digging it up again every time the files need updating - and remembering where it's buried.

There are much more practical approaches. You could store the backup drive at work, or at a friend's house.

Or you can back up your files to the internet. There are plenty of cloud-based services available which will store your data securely on a server.

The big names are Amazon's Cloud Drive, Dropbox, Apple's iCloud, Google Drive and Microsoft SkyDrive.

They all give you 2 to 7 gigabytes of storage space free upfront and charge if you choose to buy more room.

Cocker says the only disadvantage of using the cloud is that it's slower to move big files about, but that shouldn't matter for small business owners and the average consumer.

All up, disaster-proofing your home costs little, assuming you're insured - perhaps a few hundred dollars for a backup drive, safe or storage unit.

McGillicuddy says insurance claims can be settled without documentation, but it makes the process much more time-consuming.

"If it's a significant loss, it's the last thing people want to spend their time poring through."

If you take the time to be prepared, you can save a bad situation from becoming much worse.

- BusinessDay.co.nz

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