How to prepare financially for a hurricane


How to prepare financially for a hurricane


With Category 4 Hurricane Matthew quickly heading to Florida, it's probably a good time for people living near the coasts to re-evaluate their financial preparedness for a hurricane. While it's easy to assume your homeowner's policy covers every possible claim, it's better to be safe than sorry than to pay thousands of dollars in claims to settle.

Read our tips below to find out if you are financially prepared in the event of a hurricane or other natural disaster. (To read about this, see: 5 Most Expensive Hurricanes in U.S. History. )

Insurance coverage

Insurance becomes much more important in the event of a disaster, and it's critical that you have adequate coverage in place. According to AccuWeather, "1 $. 8 billion (adjusted 2011) is the average amount of damage caused by an Atlantic hurricane making landfall in the United States. "That doesn't include the damage that hits inland, including flooding and property damage. The costliest Atlantic storm to date was Hurricane Katrina, which caused $108 billion in damage (in 2005); in 2012, Sandy cost $68 billion.

Even if reading your homeowner's insurance policy is less than exciting, you need to go through it. You can assume your coverage extends to hurricanes, but the language can be muddy and confusing.

Brian Brandow of Debt Discipline said you might be surprised by the different ways insurance companies will classify natural disasters. It's important to make sure you're covered for each type that fits your location.

"The policy often divides coverage by the type of storm (tropical, category 1 hurricane, category 2 hurricane, etc.)", he said. "Depending on your policy, you could be covered for a Category 1 hurricane and higher, but not for a tropical storm. "

Miami resident and MoneySavingPro consultant. com, Amanda Abella, said insurance coverage is definitely the most important aspect to figure out. As a Florida native, Abella has seen what happens when people assume their insurance company will pay for hurricane damage without checking their policy.

"Obviously you need to take protective measures", she said. "Because hurricanes can do pretty much any amount of damage, it's actually a bit tricky. For example, a private homeowner's policy may cover wind damage, but not water damage. To make it more confusing, hurricane insurance may not cover flood damage, so you would have to buy it separately anyway. Much depends only on where you live and what you actually need. "(For related reading, see: Hurricane Insurance Deductible Fact Sheet and Does the renter's insurance company damage the water damage? )

The Insurance Information Institute has created a Hurricane Season Insurance Checklist that you can use to verify that your coverage is meeting your expectations.Sample questions are: "Do you know everything you own and how much it is worth? "And" Does your policy provide enough extra coverage for living expenses? "There is also information about renter's insurance and what information renters need to know about their hurricane coverage.

Emergency Relief Fund

Even if you have perfect indemnity insurance, it is also important to have an emergency fund hidden away. It can take months to get reimbursed by your insurance company. So you need to be able to pay for a hotel, necessary things and basic repairs. With a cash fund the transition will be easier and you less frustrated with your insurer.

You also want to make sure your emergency fund is liquid, which means you can access it easily. Keeping a rainy day fund on a CD can give you better returns, but you won't be able to get it easily in a real emergency. Use a savings account that allows for easy and quick transfers so you can access your money immediately.

"Most of the hurricane preparation is up to you to avoid having to deal with insurance companies", Abella said.

You should also keep important documents in a central location (like a safe) and store emergency cash there as well. Keep copies of your insurance policy. Even though your agent will have them on file, it is important to make sure your end is covered. (For more information, see: Eight Financial Safeguards During Disaster Attacks .)

Even if you're relying on insurance coverage to get you through a storm, you'll want to have your own precautionary systems in place as well. Location. Abella recommends measures like hurricane windows that can reduce the storm's impact on your home.

"They're expensive, but they'll save you a big headache and a lot of money down the road – especially since insurance is ridiculously complicated when it comes to hurricanes", she said.

The Bottom Line

Safety comes first, but in the event of an emergency, your financial security will ensure that the life you protect is a life worth living. While the current hurricane season may be winding down, use this as an opportunity to plan for next year's disaster.

Talk to your insurance agent, read through your policy and ask your questions. It's better to be thorough and take your time than to end up with inadequate coverage. 

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