Living on the Gulf Coast, everyone is aware when hurricane season rolls around. Each year, you begin sorting through your garage, shed, or storage bins to make sure you have all of your storm-prepping essentials. Things like batteries, bottled water, plywood, fuel, and food are often at the top of the list. However, what often gets overlooked, and what is arguably just as important, is making sure your home-related financial affairs are in order.
Here are five essential steps to make sure you are ready for that next hurricane.
Review your homeowner’s insurance policy.
Does your homeowner’s policy contain a rider for wind, hail, and named storms? If not, do you have a separate wind and hail policy? Have you made any improvements to your home or have construction costs risen in your area? If so, it’s important to make sure you’ve updated your policy to cover the value of the improvements and that your policy provides Replacement Cost Value (RCV) coverage rather than Actual Cost Value (ACV). Without RCV coverage, you may not have adequate coverage to rebuild your home.
Set aside an emergency fund to cover unexpected expenses.
It’s important to know how much your deductible is for a named storm. Often times, the deductible for a named storm is higher than your typical wind and hail deductible. Just as you would have an emergency fund for unexpected events such as a disability, you may want to set aside enough funds to cover your insurance deductible, especially if it is more than you can cover through your normal cash flow.
Your homeowner’s policy may cover some of your expenses if you are displaced from your home, but there is usually a daily, weekly, or monthly limit. Make sure you’re aware of these limits so you aren’t adding additional financial stress to an already stressful situation.
Maintain a good inventory of everything in your home.
Should the unthinkable happen and your home is ravaged by a storm, will you have the documentation you need to replace all of your belongings that were destroyed, or will you be trying to remember how many socks were in your drawer, how many pictures were hanging on the wall, and how many towels were in the linen closet? You should read your insurance policy and understand what documentation is needed to verify your lost possessions. Without a detailed inventory, you might not receive the insurance payout you were expecting to replace your belongings.
Bonus Tip: use your smartphone to take short video walk-throughs of each room in your home. Then, upload those videos to cloud-based storage for easy access from anywhere you have an internet connection.
Take steps to protect your home from damage.
You’ve probably heard someone say they are waiting on a hurricane to hit so they can have their deferred home maintenance taken care of while only paying a deductible. It might sound logical, in theory; however, the truth is that it is much more costly (and stressful) to go through a claims process than it would be to protect and maintain your home over time. After a severe storm where thousands of homes have been damaged, it may be weeks or months before the insurance company is able to settle your claim. It may be even longer before you are able to have the repairs made as the skilled labor force is likely to be overwhelmed by the volume of work to be done.
Take action now, in advance of the storm. Invest in storm shutters, cut weak branches and trees that could fall on your home, secure outdoor furniture, and move your valuables away from windows and to higher points in your home.
Compare your insurance coverage against other providers.
Your insurance company may be the best for your needs, but there’s a chance they may not be. Speak with your agent about your current policy to make sure you understand your coverage. Then, check around with other carriers to see how your policy compares. You may find some substantial differences between the policies. If these differences are important to you, you may ask your current agent whether or not these items can be added to your policy. If not, it may be worth switching carriers.
Don’t, however, base your decision solely on price. Even though a policy may be less expensive and appear to have the same coverage, they may not have the best customer service. Customer service may not seem like an issue now, when nothing is going wrong, but when you are going through a claims process, it will make all the difference in the world knowing you have someone who understands your situation and is going to do their best to serve you well.
By taking these five steps, you can feel confident your financial stress due to a storm will be minimal. Be prepared! Don’t wait until you hear a hurricane is in the Gulf. When that time comes, it will be too late.