September 2, 2019
It does. As Hurricane Dorian – now a Category 5 storm – approaches the southeastern states, I wanted to help our listeners better understand how to prepare themselves and their families financially for a natural disaster.
First things first: listen to local authorities, heed their warnings, and evacuate if ordered. Nothing is worth you or your loved ones getting hurt, or worse. Please do not put yourself or others in harm’s way.
That said, if you have time to take precautionary steps before Dorian arrives, here are some actions you want to take. You want to gather your important documents — birth certificates, marriage license, Social Security cards, passports and financial records including copies of your mortgage, bank statements, credit card records and your insurance coverage. Also, make sure you have information about bills you pay, including contact information for your creditors. You may need to contact them if a disaster makes it difficult to make any payments on time. Have digital and physical copies, and store then in a safe place. Keep originals in a watertight or fireproof box that’s easy to grab if you must evacuate.
Once you have done this, review all insurance policies ahead of time, making sure they are up to date. Renters who don’t already have it should consider renters’ insurance. You have to purchase insurance before you need it, and this may still be possible. Once you have done this, make an inventory of your belongings. Doing this will make it easier to file an insurance claim. The Insurance Information Institute suggests taking pictures and using an app to make a record of all your belongings. This inventory can also be useful if you claim any casualty losses on your taxes, according to the IRS.
If you return to damage from Dorian, you want to file your insurance claims as soon as possible! Take pictures and fill out only the bare minimum documentation you need, then submit it. The reason to do this is because insurance claims are handled on a first-come, first-served basis. You can assemble all of the proper documents and provide subsequent information later. Also, those first in line generally encounter fewer hurdles from their insurance company, so it helps to be at the front of the line. You should also try to get repair estimates before the claims officer visits, as this will help understand the true costs of the damage. Lastly, keep receipts for all expenses as you may be able to have these costs reimbursed through your insurance or other channels. If you have uninsured property losses, you should contact the Federal Emergency Management Agency. FEMA can assist uninsured residents with immediate shelter needs and also in the rebuilding process.
Absolutely! Not everyone is threatened by hurricanes, but tropical storms are not the only challenges Mother Nature throws at us. There are two big steps you can take in order to be better prepared in the event of a natural disaster. First, a healthy emergency fund is important. This way, if you have damage to your belongings or if you miss work in the wake of a disaster, you will be able to withstand the financial punch. It will also allow you to start getting your life back together while you sort out any insurance claims.
Which brings us to the second tip: review your insurance coverage. Many people assume their homeowners insurance or renters insurance will cover damages to belongings resulting from natural disasters. In reality, insurance policies vary significantly, meaning your coverage may not include everything that it could as a result of storms, fires, floods, or other natural events. A few years ago in Colorado, many residents were not covered because they did not realize they lived in a flood zone, or they simply believed it could not happen to them. That means you have to take it upon yourself to know what your insurance covers. Go through it with a fine-toothed comb. In particular, make sure you have flood insurance, as it one of the most common claims that is not covered by basic homeowners insurance. You may also want to look into disability insurance and life insurance to be safe.
The information on this page is provided for educational purposes only and is not tax, legal, financial planning or investment advice. Neither the information nor any opinion expressed in this section constitutes an offer to buy or sell any securities or advisory products. The information provided is general and is not information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. You should not regard this information as a substitute for the exercise of your own judgment. Investing involves risk.