Money Matters: Protection Planning for Your Physical Residence
In this month’s edition of “Money Matters,” Scott talks about the the importance of protecting your home, including having adequate homeowners insurance and documenting your possessions in a video file, as well as tactics to protect your home from burglars.
Here are some sites with valuable tips to help protect your physical home from burglars and intruders:
Money Matters: Protection Planning for Your Physical Residence Transcript
0:00:00.3 Sterling: And next we have another edition of Money Matters, a monthly feature intended to help us understand more about managing our finances. Scott Oeth is a certified financial planner and adjunct professor. He works with many individuals and has taught retirement planning and wealth management strategies to hundreds of financial professionals. And Scott joins us now by phone. Hey, good morning, Scott.
0:00:26.6 Scott Oeth: Good morning, Sterling.
0:00:29.3 Sterling: So, you've suggested that we talk about protection planning this morning, or protection planning for your residence. What does that entail?
0:00:38.4 SO: Well, important stuff, Sterling. Many times on these episodes, on Money Matters, we're talking about things about savings and investments and things related to the markets, and sometimes tax planning, a lot of issues, a lot of tips related to building financial assets to fund life's goals. But we don't want to forget about protection planning. In fact, that should really come first. It's very important. We want to make sure we're not just building a financial house of cards. There's a whole lot we could talk about here, and I think I should bring more of these ideas forward in future episodes, but there's a couple relatively simple steps that people can take or consider to protect themselves on the physical front, especially as it relates to their home and their residence.
0:01:23.8 Sterling: Sure. What are a few of those steps that people can take?
0:01:28.3 SO: Well, I think, just to touch on a couple, there's financial-related steps, like insurance planning, and then also some physical type steps or tips I wanted to touch on. So, with insurance, one of the first ones is just real simple. Review your coverage, your renter's coverage, your homeowner's coverage, especially after there's been home improvements. So, you own the property. If there's a period where there's been a rise in value, many times, reviewing client's coverage, we'll see that people appear to be really underinsured. I'm not an insurance agent, my firm isn't, and we don't sell any policies, but we think this is very important as it relates to their financial plans. We're often saying, hey, go back to your agent or find a good agent that you like and work with them to monitor your coverage periodically and let them know if you made an improvement to the home or things like that because you want to make sure that you're adequately covered.
0:02:21.8 SO: It's also a good idea periodically to do a little comparison shopping. There are some great agents who are with what would be called captive insurance agencies, where they're selling those company’s products, and that's fine, but there are also independent agents or brokers who can shop amongst many different types of carriers out there, and that might be a good place to go for that periodic, once every five years review and say, am I really getting not only the appropriate amount of coverage, but cost effective coverage? So, there's that. Then, a big one that we look at often is a type of coverage called umbrella liability insurance or excess liability. This is a very broad based type of protection that goes on top of your underlying homeowners or auto insurance, and it's comparatively cheap. It can bring a lot of protection. I really think it's worth evaluating for folks.
0:03:13.7 SO: This is, of course, this is general information. People need to make their own decisions and seek their own expert advice, but oftentimes I've seen that if someone's gotten themselves in a reasonably good financial position, they could afford to absorb a smaller financial loss. It might make sense to raise their deductibles and use that savings that they get in premium from raising their deductibles and use that to add a big layer of $1 million or, in some cases a couple of million dollars, worth of umbrella liability coverage on the top end to help manage those risks—the big ones that could truly impact or derail your financial plan.
0:03:51.9 Sterling: Sure, and one of the things I saw, your topic, Protection Planning, one of my thoughts would be, would that be like documenting things that you own, things like that?
0:04:02.1 SO: Absolutely. You're right on track. This is another simple one. I've been recommending this for a long time. In fact, for so long, what I used to say is, if you don't have a camcorder, borrow one and make a video record of the contents of your home. Well, hey, everyone's got one in their pocket now these days, or most people do with a smartphone. This makes me think back. A long time ago I had a client whose house was struck by lightning. There was a fire. It didn't burn the place to the ground. In fact, the fire was somewhat contained, but the smoke damage, the water damage in their two story home was extensive, and in working with them, when they showed me the big fat three ring binders from the insurance company, because they're able to go through the home and record the contents since it hadn't been burnt to the ground, it was amazing how many cans of soup and books and pairs of shoes and things like that that people have, I thought there's no way you'd be able to remember all of this.
0:04:54.6 SO: So, I think, a good weekend project is to take your phone and go around and make a video of the contents of your home. If there's anything special, of special value, add some narration and talk through as you're going through the home. Have that stored offsite, in the cloud, and it could really help aid in the recovery process if there is a fire or there's a theft or something along those lines. That leads into my last tip: I'll just say, unfortunately in the last four years, I've had four different clients who've had their homes broken into and burglarized. I've never had this in my entire career, and I think it highlights it's worth, again, not only the financial coverage, the insurance policy, but take a look at what you can do hands-on with physical security: lights, locks, trimming back bushes, different things like that.
0:05:48.0 SO: Many police departments have good lists. I'll post one with this episode on my blog. I'll share links to a few, but basically, I don't know, you probably can't stop every threat, but you don't want to appear to be the soft target ease either. I think there's a lot that people can do to work to enhance the physical security of their home from that standpoint.
0:06:08.8 Sterling: Certainly. We're talking Money Matters with Scott Oeth this morning. Anything else on this topic to add, Scott?
0:06:19.1 SO: Well, there's a lot there. So, like I said, number one, evaluate where you are, revisit with your insurance agent, talk about some of these ideas, see if you're adequately protected. Ideally, I think it's one part of your overall financial plan. Really advocate people, you seek out, find a good certified financial planner to connect with as part of all this. I'll try and add some additional info when I post this on the blog. I know you upload to the WTIP site as well, but think through some of those physical security steps as well. There's some easy ones that I think can go a long way towards not being a soft target with your residence.
0:06:55.1 Sterling: Yeah. Well, we'll be on the lookout for that, and thank you so much for joining us this morning.
0:07:01.0 SO: Thank you. I appreciate it.