The massive Fort McMurray wildfire in Alberta,
Canada, is a warning to all of us about how quickly disaster can engulf a
community. Earthquakes, floods, tsunamis, hail, hurricanes, tornadoes and
lightning strikes are more of the nasty surprises that nature can whip up.
Unfortunately, bad weather can affect anyone. It is important to prepare for
both large-scale and small-scale natural disasters so that, when the damage is
done, you have the means to pick up the pieces and rebuild your portfolio and
your life. In this article we will look at what you need to do to make sure
your financial interests come out on top after any of these uncontrollable
events.
Be Sure of Your Insurance
It is a common recurring theme in every area
struck by a natural disaster that a) no one saw it coming, and b) no one was
properly insured for it. Sitting in our dry and cozy home, it can be easy to
feel smug by comparison, but the truth is that almost everyone can be
under-insured for a true disaster. The biggest wake-up call is the fact that
homeowner's insurance covers a very limited set of circumstances – fires from
faulty wiring and such – that doesn't include all the natural disasters that
your area may be prone to.
Full Replacement Coverage
At the very least, you should have full
replacement or replacement cost coverage. This policy will cover the cost of
replacing your home or other insured buildings. Pay attention to the limits of
the policy because they will define what kind of further coverage you need.
Earthquake and flood insurance are sold as separate policies and, although the
premiums can be high, you should buy them if you live in an area that regularly
suffers such disasters.
If you are new to the area, the local library
archives will have environmental data that will help you look into what kinds
of natural disasters have occurred in the area in the past.
Keeping Current
Once you have your home covered with all the
relevant policies, you will need to have your home reassessed every few years
so that the policies reflect the true value of your house. Also, if you do
major renovations, such as installing hardwood flooring or finishing the
basement, you will need to update the policy. There is a more extensive home
insurance policy available called a guaranteed replacement cost policy. This
policy will rebuild your home, and may include improvements dictated by changes
in the building code (something other policies may omit), but it is not
available everywhere.
Covering Your Possessions
For the best insurance records, consider
keeping a detailed list of the contents of your home and update it yearly. The
list should include serial numbers, photos and descriptions of everything, even
the fixtures. This will expedite the processing of any claim you may file and
serve as documentation for your tax losses and deductions.
The best way to make sure your list is
accurate is to ask your insurance agent what he or she wants to see in a claim.
For more expensive items like jewelry and costly electronics, you should
consider separate coverage over and above the basic coverage of the items in
your house (items that are likely depreciated yearly by your insurance policy).
If you have a home office, you can get affordable business coverage to cover
the equipment that you use for the business, rather than putting it under your
basic home policy.
Renting? You Still Need Coverage
The insurance that your landlord carries will
cover damages to the building, but not your possessions. Therefore, if you live
in an area that's prone to natural disaster, you should consider renters
insurance. Not all policies are created equal; if you get a bare-bones policy
that just covers the replacement cost of your stuff, you will be missing
possible coverage for the relocation to another area or the living costs while
you wait for your apartment to be repaired. Renter's insurance can be pretty
cheap, so shop around for the best policy and the best price. Reading 6 Good
Reasons to Get Renter's Insurance can help you get started.
Emergency Documents
With the exception of your will, which should
be kept by your attorney or at the local registrar's office, you should rent a
safety deposit box for the originals of all other important documents. Keeping
them in your home puts you at risk of having them stolen, destroyed in a fire,
swallowed in an earthquake and so on. This includes everything from your home's
deed to your marriage license.
One good idea would be to make two extra
copies of all of these documents and leave one set with your attorney or a
trusted friend/relative. The second set will be placed in your emergency kit.
Emergency Kit and Your Wish List
An emergency kit is a small and compact
package of things that you want to bring with you in the event that you and
your family need to flee from a disaster. Your emergency kit should be a box
small enough to run with. Making a pack that is waterproof with a lock would be
a plus, but a child's plastic lunch box will do in a pinch. Inside should be:
· Copies of all your important documents (home's
deed, marriage license, credit cards, passports, birth certificates, etc)
·
Your credit cards
and enough cash (or even traveler's checks, which are more secure than
cash) to make it
through a few days at a hotel
·
Copies of any
prescriptions and your health and dental insurance cards
· Computer backups of your financial records (if
you have them) or copies of the first two pages of your most recent federal and
state income tax forms
Also, make a wish list of items to take in the event that you have the time to collect a few select items before you need to flee. This can be negatives or CDs of cherished family photos (unless they are all in the Cloud), jewelry or whatever else is important to you and can be quickly stuffed and carried in a small bag. It is easier to make the decisions now, when the roof and walls aren't falling in around you and your loved ones. Post the list somewhere easy to find, like a kitchen bulletin board.
Also, make a wish list of items to take in the event that you have the time to collect a few select items before you need to flee. This can be negatives or CDs of cherished family photos (unless they are all in the Cloud), jewelry or whatever else is important to you and can be quickly stuffed and carried in a small bag. It is easier to make the decisions now, when the roof and walls aren't falling in around you and your loved ones. Post the list somewhere easy to find, like a kitchen bulletin board.