September is National Hurricane Preparedness Month, making it a good time to prepare your home and your finances before a storm threatens your area. A hurricane can bring more than wind and rain. Power outages, evacuation orders and property damage can create immediate costs, sometimes before insurance payments or other assistance arrives. A little financial preparation can help you respond without adding unnecessary stress.
Here are four steps to help you prepare your finances for hurricane season.
Review Your Insurance Deductibles
Start by reviewing your homeowners or renters’ insurance policy. Make sure you understand what is covered, what is not and how much you would have to pay out of pocket before your coverage kicks in.
Do you have windstorm coverage?
Your homeowner’s insurance may cover damage from high winds, but coverage can vary depending on your policy and where you live. Some policies have a separate windstorm or named-storm deductible that is different from your standard deductible.
Check your policy to find out what your deductible would be if a hurricane damaged your home. Knowing this amount in advance can help you determine how much to set aside for emergency repairs.
Do you have flood insurance?
Standard homeowners’ insurance may not cover flood damage. If your home is damaged by rising water from a hurricane or other flooding event, you may need a separate flood insurance policy to help cover the cost.
Take time now to review your flood risk and insurance options. Even if you have never experienced flooding before, heavy rainfall and storm surge can cause flooding in areas that don’t typically flood.
Build a Post-Storm Emergency Fund
A hurricane can make it difficult to access your money in the usual ways. Power outages can knock out ATMs, internet service and credit card readers, so it’s smart to have a backup plan.
Keep some cash at home
Keep a small amount of emergency cash in a secure, waterproof location in your home. Small bills are especially useful because stores may not be able to make change during an outage.
You don’t need to keep a large amount of cash on hand. The goal is simply to have enough for immediate necessities if electronic payments and ATMs are temporarily unavailable.
Set aside an evacuation fund
If you need to leave your home, you may have to pay for a hotel, fuel, meals and other unexpected expenses. Consider setting aside money specifically for these costs as part of your emergency fund.
Check your homeowners’ or renters’ insurance policy to see whether it includes coverage for additional living expenses. This type of coverage may help with certain costs if your home becomes unlivable because of a covered event.
Create a Financial Evacuation Binder
If your home is damaged or you have to evacuate, you may need important documents to file an insurance claim or apply for disaster assistance. Create a financial evacuation binder with copies of these documents. Keep the original documents in a secure location and consider storing digital copies in a secure cloud account as backup.
Property information
Keep records that can help establish ownership of your home and provide important account information, including:
- Deed or other proof of ownership
- Home loan account number and lender contact information
- Property tax statement
- Home improvement records and receipts, when available
Insurance information
Keep copies of your insurance policies and important contact information, including:
- Policy numbers
- Insurance company names and phone numbers
- Claims phone numbers
Video evidence of your home
Before a storm, walk through your home and record a video of each room. If your home is damaged, the video can provide a record of what your property looked like before the storm and may be useful when documenting a claim.
Reduce Your Risk Before the Storm
Financial preparation is important, but preventing or reducing damage in the first place can save you money, too.
Before hurricane season reaches its peak, walk around your property and look for potential hazards. Clean out gutters and downspouts so water can drain away from your home. Trim tree branches that hang over your roof or near power lines. Secure outdoor furniture, grills and other items that could become dangerous in high winds.
You don’t have to wait for a hurricane to be in the forecast to prepare. Review your insurance coverage, build an emergency fund, gather important documents and address potential hazards around your home now. A few hours of preparation today can make a major difference if a storm affects your home.