With Hurricane season among us, it’s probably a smart idea for people living close to the coasts to re-evaluate their financial readiness for a hurricane. It is easy to predict that your homeowner’s policy will cover any and all damages, but it’s always better to be sure than ending up spending thousands in damages.
We have added a few tips below to help you discover if you’re financially ready if another hurricane or any other natural disaster strikes.
In the event of a natural disaster, insurance becomes much more crucial and ensuring you have the right coverage is key. According to AccuWeather, “$1.8 billion (2011 adjusted) is the average amount of damage caused by an Atlantic hurricane that makes landfall in the United States.” That excludes damage that reaches inland, like flooding and property damage. The most expensive Atlantic storm to date was Hurricane Katrina in 2005, which resulted in $160 billion in property damage. According to the weather channel, in just one year in 2017, reeled in $125 billion with Hurricane Harvey, and $90 billion with Hurricane Maria.
Though, analyzing your homeowner’s insurance policy is not the most exciting, it’s very important that you read every word in it. You may predict your coverage will cover hurricane damage, but the verbiage can be cloudy and confusing.
Brian Brandow of Debt Discipline reported the number of ways insurance companies will classify natural disasters might surprise you. It’s important to ensure you’re covered for each type that fits your location.
“Policies often divide coverage by the type of storm (tropical, category 1 hurricane, category 2 hurricane, etc.),” he stated. “So depending on your policy, you could be covered for a category 1 hurricane and above, but not a tropical storm.”
Have An Emergency Fund
Even if you the right insurance policy, it’s also key to have an emergency fund put away in the event of a hurricane. It may take a couple of months for your insurance company to reimburse you, so you need to have a way to pay for expenses like hotels, basic repairs and any other necessities that you or your family need. If you have a cash nest egg it will make the transition smoother and make you less stressed and worried with your insurance provider.
It’s also important to remember that you need your emergency fund to be liquid, which means you have easy access to it. Though having a stock portfolio or CD could give you more optimal returns, you won’t have the availability to get ahold of it in an emergency. If you use a savings account you can transfer funds quickly, so you’ll be able to access your money right away.
“Most of the hurricane preparation is up to you in an effort to avoid having to deal with insurance companies,” Abella stated.
Even if you’re depending on insurance coverage to get you through a storm, you want to also have your own systems ready to go in an event a storm strikes. Abella suggests measures like hurricane-impact windows, which can ease the storm’s impact on your house.
“They are pricey, but they will save you major headaches and lots of money down the road – especially because insurance is ridiculously complicated when it comes to hurricanes,” she added.
Safety also is the first priority. Making sure you are financially ready in an event of a hurricane or any natural disaster will ensure the life you’re protecting is a life worth living. It’s never too early to start to prepare for next year’s storm season.