October 1, 2021
Hindsight being 2020, we probably should have published this article in the previous edition.
Be that as it may, preparing your finances to manage a Hurricane, or other natural disaster, is something you should have a plan for. It’s easy to forget about the finances when you’re busy bringing furniture inside, packing, making plans for lodging and other things.
Ensuring your finances are safeguarded is not just about ensuring you have enough money to survive the storm; it’s also about safeguarding your assets, important documents and other items that are important to you. The rule of thumb when evacuating is to plan for the worst, and hope for the best.
Here are some tried and true items you should plan for.
Have an Emergency Fund
Put some money in an account to handle the basics like food and lodging in case you can’t return home. For a family of four, plan for expenses to run between $1,500-2,000 per week.
We left for Ida thinking we’d be back in town in about four or five days. We were out of town for 12.
Have a Cash Fund
If the power goes out or Internet connectivity fails, you won’t be able to use your debit or credit cards if you stay in town. Plan for about two to three days of expenses.
Become a Believer in Direct Deposit
You should set up every regular payment (payroll, social security, etc.) on Direct Deposit. Banks have backup systems in secure sites, so even though you may not be able to visit a local branch, their systems are up and running and your Direct Deposits will still be in your account,
Get Emergency Credit Cards
Get a credit card that you only use for emergencies and make sure you have a credit limit on this card to handle expenses for up to two weeks.
You won’t have to use your cash, and an added benefit is that you’ll have all of your expenses itemized on your statement to help you with any insurance claim information.
Bring Your Important Documents
After Katrina, my wife and I keep all of our important papers, insurance policies, wills, passports, tax records, etc. in a Rubbermaid container in a closet. It’s easy to just pick it up and put it in the car.
How Much Insurance Coverage Do You Have?
There was a collective gasp when everyone understood that the dreaded hurricane deductible was going to rear its ugly head after Ida. These deductibles are 2, 5, or even 10 percent of the value of your home and contents (what you’re insuring).
Check with your agent in the next few weeks and analyze if it makes sense for you to pay more for a lower deductible going forward.
What Does Your Insurance Cover?
You’ll want to read, and re-read, your policy to make sure you understand exactly what is covered in the event of a hurricane. It’s also a good idea to look up any terms you’re not aware of and discuss them with your agent.
Do I Need Flood Insurance?
Your homeowners’ policy will typically not cover flood damage. It’s relatively inexpensive, and based on the floods we’ve had over the last 20 years, something you should have whether you live in a flood zone or not.
Take pictures of everything before you leave and again when you return. You’ll need them to show your agent if any damage has occurred, and you’ll need it for your peace of mind to remember where everything goes if it got blown around.
You’ll also want to document your finances before a hurricane in case you need assistance from governmental agencies, or to ensure you have coverage for certain expenses on your homeowner’s policy. You’ll need to know how much money you spend on groceries, meals, etc. each week so they can determine how they’re going to pay/reimburse you.
Your list may look a little different than this based on choices you and your family make. The key is to identify areas you need to strengthen to ensure the safety of both your family and your finances.
Robert Baer is a Vice President at Fidelity Bank. He coordinates Fidelity’s Financial Literacy initiative.