I’m not sure we have covered the house fire in Sioux City, Iowa that took the life of 27-year-old Chonburi Louangrath. If so this post differs in it’s approach to this too often seen news item about an unintended or accidental house fire. In this case the accidental fire was caused by a child playing with matches. Children with matches don’t go well with home safety. A child playing with matches sparked a deadly fire in Sioux City, Iowa this past May. The Iowa Department of Safety concluded the house fire that claimed the life of Chonburi Lauangrath, 27 was started by a child playing with matches.
After an accidental fire the typical legal questions include whether the structure and contents are covered under the homeowners, owners or renters insurance policies. Of course structure and contents are different in many respects and are covered under different insurance policy provisions. Each section may provide different results based on policy language and the degree to which the insured actually insured the structure and the contents. That sounds like double talk but it’s about the choices you make when you take out the policy of insurance.
For instance, if you took out a mortgage when you purchased the home, your lender may have dictated the minimum of how much insurance you could take out. The lender always wants its mortgage covered by casualty insurance. So there you can self-insure the difference, but that’s not always the smartest thing for young homeowner’s to do. If you don’t have the money to rebuild it’s pretty foolish to self-insure the amount of equity over the principal amount of the mortgage. After all if the structure is destroyed by fire, weather or other casualty you might end up not being able to rebuild, but still having to pay to clear the debris and to pay annual real estate taxes.
Insuring the contents is a whole other issue to tackle. What is the value of what you own in the home? That’s a moving target that changes daily. The first challenge to valuation being depreciation and the second being new purchases. Everything you own is worth less tomorrow; or at least that is the assumption all insurance companies make. The day after you purchase something new the insurance company is going to assume it’s worth less, to some degree. So knowing what you own and how much is its present value is a constant challenge.
So how can you protect your investment of home and contents? First I’d suggest making it an annual event for the owner or owners to videotape everything and to remove the tape from the premises. Keep it at work or in a bank vault but annually shoot a videotape of the home contents and remove it from the premises. The easy way to do this is for one person to operate the video camera and the other to open draws, with each adding commentary as necessary. Commentary might be a description of the property item that includes make, model, approximate date of purchase and serial number. This may seem like a royal pain in the rear but if you’ve ever suffered a loss trying to recreate what you owned is an even larger pain in the derrière.
Another thing that I do is keep all owners’ manuals in one location. If you suffer a theft loss it’s easy to prove what major appliances (computers and tools included) you own by reference to the owner and user manuals. When I purchase an item I do fill out the owner/user manual with the serial number, etc. I can’t say I do it 100% but I do try to stay close.
When videotaping don’t forget to shoot the basement, garage, attic and shed with all of those contents. Remember it’s a lot easier to sit and watch a video tape on television or to hand it to a transcriptionist who can type a list of what they see and hear on the videotape. Your job is then to clean it up based on your own viewing of the videotape and the owner manuals you’ve kept.
Casualty losses are a complete drag on your life and quick way to devalue the contents you’ve accumulated and invested in. You may hate this chore, but over a few years you’ll accumulate a video library (compact discs work just fine) that catches most everything you own. There is a less appreciated benefit to doing this annually as well. It refreshes what you already own allowing you to not make duplicate and wasteful purchases. It also has the effect of making you a smarter consumer. You’ll begin to ask yourself, “Do we really need to make this purchase?” I think a lot of people buy out of nervous energy rather than out of necessity. The key to a good marketing program is to persuade you to buy something you really don’t need. If we can break the habit of spontaneous purchases we can save money for investments and for retiring with a better lifestyle. This is what Robert Kiyosaki and Sharon Lechter teach in the books Rich Dad Poor Dad and the Cash Flow Quadrant. Eliminate the doodah purchases and instead invest the savings. As he says the difference between the rich and the working class is the poor work for money and the rich get their money working.
Back to the original news item, a child playing with matches, especially boys, is a childhood adventure the adults need to anticipate. Like drugs in the bathroom easy access is a challenge to anticipate. In this case a 27-year-old man lost his life and paid the price of two days where he probably suffered tremendously. A child’s life is altered, and not in a good or productive way. The child has to deal for a long time to come with his actions taking the life of a man. Adults need to be smart about things like matches, drugs in cabinets, household cleaning products and poisons being stored in a way that limits accessibility to young children. With children the rules haven’t changed in centuries: simply expect the unexpected.
And parents know this; you can be sued and found to be liable for not controlling access to things like matches or prescription medications. Check out that homeowner’s insurance policy along with where you stow the matches and prescription drugs. We all can make mistakes but when we do let's make sure we have insurance coverage. The video that follows is an example.