An Old Lesson From Our Most Recent Bush Fires

A Lesson Worth Learning

I wanted to share something that’s come out of the recent bush fire tragedy which I think is relevant to everybody. After you go through a tragic event like this, no one wants to be left in a situation where they think they are going to be okay, only to end up with a very different outcome.

So one of the things I read recently, is a terrific article by Chloe Lucas for Firstlinks. It is all about the learnings taken away from the last time we had severe bush fires, like the fires in the Blue Mountains in 2013 and Black Saturday fires in 2009.

It’s hard to talk about this stuff in the context of just wealth because losing what you own is so much more than just possessions.

It’s something much more profound.

However, in what we do with our clients, we have to take a backward step and look at things in a way that is very analytical to look after their best interests. And the way that we give advice is not to look at just investments or just insurance – it’s to take a holistic approach that incorporates everything.

The Lesson…

One of the things I love about this article, which you can read here <link> is it casts a bright light on a blind spot that’s all too common. The level of financial protection. This problem that continues to reappear, is they tend to cover their possessions for their current value, rather than the actual replacement cost.

This is really important because at the end of the day if you experience an event of this nature and all your possessions are only partially covered, the pay-out you receive will only go part of the way to getting back on your feet.

As the article suggests, some have even taken out a new mortgage just to get back to where they were.

I’m not trying to scare people here, but let’s be honest, a lot of people don’t think about it very rationally. They just make a “best guess”, which can be kind of like taking a shot in the dark and hoping everything will be okay, or wishing you had installed a burglar alarm, rather than just relying on the standard locks after you’ve been robbed.

What to do next…

So it’s worth the time, especially now, to sit down and do more than a back of the envelope calculation.

  • Work out what it would cost to replace all your possessions. Use the internet or pick up the phone and call people.
  • Get an accurate quote or cost to rebuild
    • your home,
    • to replace the families wardrobes,
    • appliances,
    • furniture, 
    • even add in accommodation for the family 12 months while the house is being rebuilt or restored. The last thing you want to be doing is crashing on your mother inlaws couch for 12 months!

How does that compare to the current levels of cover?

The last top tip would be to take a video or photographs of your possessions and store them in the cloud or a private photo album on social medial. Just in case you ever need to provide evidence to an insurer.

The next thing you should do, and arguably the most important, is read through the Product Disclosure Statements of the cover you have in place and highlight important clauses and conditions

I know this is not the most interesting of tasks, but that’s often the leading cause of problems, and why I do what I do. It’s about making sure that the policy you own is suitable for you and your family.

In summary…

This time of year is a perfect time to make sure that the parachute you’ve laid down for yourself, is rated for the weight you expect it to carry.

I hope you’ve found this useful.

If you know somebody who you think might be interested feel free to share it.

Alternatively, if you’re in that 2020 is going to be the best year financially ever mode and would like to ask some questions about this or anything else, feel free reach out. I’m happy to help as best I can.

Take care.

Daniel Twentyman B.Bus.(Eco) Dip.F.S.(FP) Financial Planner – Authorised Representative