Natural Disaster Preparedness
/By: Liz Plot
Is your home properly protected against a natural disaster?
(Read this article to make sure you are properly insured and what to expect if there is a loss)
As more and more natural disasters pop up across the country, it’s important to make sure your home is properly protected in advance of any major catastrophe. For this post, we are focusing primarily on fire damage.
Everyone, homeowners and renters, should have insurance to protect their personal property and home. If you’re a renter, make sure you have renters insurance with enough coverage to replace your possessions (at least $20k-$30k of contents coverage). Renters insurance is available in most cities through Lemonade and can be as little as $5 a month.
If you’re a homeowner, take a moment to review the dwelling coverage on your home. Make sure the replacement value is enough to rebuild your home with like materials and construction in the event of a complete loss. Your insurance company should be able to give you a good estimate of how much coverage you need (this will vary depending on your part of the country).
Many companies have a multiplier that will cover up to 125% to 200% of your dwelling coverage. It is critical to understand how much dwelling coverage you have and if it will be enough to rebuild your home. Please ask us and/or your insurance agent if you are unsure.
Next, review your loss of use coverage. This covers your expenses in the event your home becomes uninhabitable. You want to have enough coverage so that you can live somewhere else while your home is being rebuilt. Living with family members during this time is a good Plan B, but ask yourself: How long will your sister let you crash at her house with your 2 dogs, 3 kids, and an Oreo-stealing wife?
As a side note, it can take insurance companies time to process a claim so it’s also important to have an emergency fund with at least 3-6 months of living expenses. Another best practice is to keep a copy of important documents offsite in a safety deposit box or in the cloud using a service like Dropbox or Google Drive.
What if a wildfire destroys my home? What do I do and what happens next?
Contact your insurance company immediately.
Contact your mortgage lender immediately.
Keep receipts of all expenses. This is very important so I’m going to say it again. Keep receipts of ALL expenses. If your home is unlivable, your insurance company will reimburse some of these expenses and you may be able to write off the remainder on your taxes.
Contact your credit card company to report any cards lost in the fire.
Take pictures of the damage.
Keep a record of all emergency responders.
Start a list of all the documents you need to replace (passports, licenses, etc.).
Keep receipts of all expenses. I told you this was important!
Wait for your claim to be paid out, which is why a strong emergency fund is important.
The insurance company paid out your claim – now what?
While you decide the next steps, it’s important to keep this money liquid and accessible. We recommend keeping it in your checking account or high yield savings account through an FDIC-insured provider such as Ally, American Express, or Barclays. With an online bank like Ally, your money is readily accessible like in a regular savings account, but it pays you a much higher interest rate.
We hope these tips help you feel better prepared to handle a fire emergency. Have any additional questions or want help from a financial planner to see if you’re properly insured? Schedule a complimentary meeting with one of our team members here!
Team Spotlight:
Elizabeth Plot, CFP®, ChFC®, AFC®, EA
Liz joined the Ballast Point team in October 2017. She’s currently living in Maryland with her two daughters and husband. Liz enjoys all things chocolate, making clients laugh, exploring national parks, and Ted Lasso.
Please enjoy this throwback picture from 2018 when she tricked Shawn into attending a kickboxing class as a “team-building” exercise.
