Broker Check

How to financially prepare for a hurricane

| September 14, 2018
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With Hurricane Florence bearing down on the Carolinas, it's probably a good time for people living near the coasts to reevaluate their financial preparedness for a hurricane. While it's easy to assume that your homeowner's policy will cover any damage, it's better to be certain than to wind up paying thousands of dollars in damages.
 
Insurance Coverage
Insurance becomes much more important in the case of a disaster, and making sure you have appropriate coverage is key. According to AccuWeather, "$1.8 billion (2011 adjusted) is the median amount of damage caused by an Atlantic hurricane that hits land in the United States." That doesn't include the damage that hits inland, including flooding and property damage. The costliest Atlantic storm up till now was 2005's Hurricane Katrina, which caused $160 billion in property damage. Just one year, 2017, brought the next two - Harvey, causing $125 billion and Maria, estimated at $90 billion, according to the Weather Channel.  
 
Even though reading your homeowner's insurance policy is less than thrilling, you need to go through it. You may assume your coverage extends to hurricanes, but the language can be muddy and confusing.
 
The Insurance Information Institute has created a Hurricane Season Insurance Checklist that you can use to verify that your coverage meets your expectations. Example questions include, "Do you know everything you own and how much it's worth?" and "Does your policy provide enough additional living expenses coverage?" There's also information about renter's insurance and what information renters need to know about their hurricane coverage.
 
Emergency Fund
Even if you have perfect insurance for compensation, it's also important to have an emergency fund stashed away. It may take months for your insurance company to reimburse you, so you need to have a way to pay for a hotel, necessities and basic repairs. Having a cash fund will make the transition easier and make you less frustrated with your insurance provider.
 
You also want to make sure that your emergency fund is liquid, meaning that you can access it easily. While keeping a rainy day fund in a CD might give you better returns, you won't be able to easily get hold of it in a true emergency. Use a savings account that allows easy and fast transfers, so you'll be able to access your money instantly.
 
You should also keep important original documents in one central place (such as a safe in the bank) and have emergency cash stored there as well. Keep copies of your insurance policy there. Even though your agent will have them on file, it's important to make sure your end is covered. Then make sure you have duplicates of everything in another safe place - preferably far away, such as with a trusted friend or relative in another state. You can also store password-protected scans of documents in your Wealth Management Solutions website. You might also keep copies in an emergency bag that you take with you if you have to evacuate your home. 
 
The Bottom Line
Safety comes first, but ensuring your financial safety in the event of an emergency will make sure the life you're protecting is a life worth living. Even when the hurricane season winds down, start planning for next year's possible disaster.
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