Natural disasters happen no matter where you live. Laura explains how to be properly insured, get a fair claim settlement, apply for federal assistance, work with contractors, and avoid scams. You'll learn how prepare for and deal with any type of natural disaster so you ’re in the best position to save yourself and your finances.
Hurricane Harvey caused unprecedented damage to much of the Texas Coast and the Houston area after days of relentless rain, wind, and storm surges. The damages are estimated to cost over $160 billion, more than Hurricanes Sandy and Katrina, and will likely take years rebuild.
Even if you don’t live in a typical hurricane path, every area is prone to potential natural disasters—such as tornados, earthquakes, wildfires, flash floods, and winter storms—that could turn your life and finances upside down. So, it’s important to prepare now and know what steps to take in the aftermath of a disaster.
In this post, you'll learn how to be properly insured, get a fair claim settlement, apply for federal assistance, work with contractors, and avoid insurance scams. I’ll cover tips to prepare for and deal with any type of natural disaster so you ’re in the best position to save yourself and your finances.
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How to Prepare for a Natural Disaster
Being prepared is the best way to protect your family, property, and finances from any type of emergency or natural disaster. While certain emergencies come with a little notice, like a hurricane, others may be completely unexpected, such as an earthquake or tornado.
During a natural disaster, you could be separated from your family, be away from home, or be without water or electricity. By taking a few steps now, you won’t be caught completely off-guard in an emergency and can manage your household’s unique situation the best way possible.
No matter what type of natural disaster you might face where you live, follow these 5 tips to be prepared and stay safe:
1. Have adequate insurance.
Just about every homeowner has home insurance, because mortgage lenders require it. A basic homeowners policy pays for claims when a natural disaster, such as a fire, tornado, hail, or windstorm, damages your property. Your possessions, such as furnishings, clothes, electronics, and jewelry, are generally covered up to certain limits for damage or theft.
There’s also a liability portion to protect you if someone gets hurt while they’re on your property or you accidently hurt someone anywhere in the world. Home insurance also pays “additional living expenses,” such as a hotel and meals if you can’t stay in your home due to a covered disaster.
If you’re a renter, you also need insurance, because your landlord isn’t required to cover you. Renters insurance gives the same protections as homeowners: coverage for your personal belongings, liability, and additional living expenses. But it doesn’t cover the actual structure of your dwelling, because that’s owned by your landlord.
Problem is, six out of ten renters don’t have renters insurance. A typical renters policy probably costs much less than you might think, just $188 per year on average across the U.S.
No matter if you own or rent, it’s important to know that expensive items typically have coverage caps. For instance, you might only get $2,000 for special categories like jewelry, computers, silverware, and collectibles. If you have items worth more than the coverage caps, it doesn’t cost much to add a rider that increases limits so your most valuable possessions could be replaced.
If you have items worth more than the coverage caps, it doesn’t cost much to add a rider that increases limits so your most valuable possessions could be replaced.
Also note that certain types of disasters, such as hurricanes, earthquakes, and hailstorms, may come with special percentage deductibles, depending where you live. These are additional and separate deductibles from all other types of claims, such as fire or theft.
For instance, you might have a separate 3% hurricane deductible that applies whenever you have damage from an officially-named hurricane. If your home were insured for $200,000, you’d be responsible for the first $6,000 ($200,000 x 3%) in repair costs. That’s much more expensive than paying a standard $500 or $1,000 deductible.
In some states, a hurricane deductible applies when a Category 1 storm causes damage whether it made landfall or not. Other states allow Category 2 to be the threshold.
And in other states, a hurricane deductible applies from the moment a hurricane watch or warning is issued until 72 hours after it ends, and can only be applied once each hurricane season, from June to November. As you can see, there’s a lot to know about insurance and the fine print will vary depending on where you live.
2. Know if you need flood insurance.
Another issue that really trips people up about home insurance is that floods aren’t covered. Unfortunately, most victims of Hurricane Harvey don’t have flood insurance. This is a huge problem because neither homeowners, renters, nor business insurance covers any type of damage from ground water.
Flooding is the nation’s most common and expensive disaster. Floods don’t even have to be catastrophic to cause major damage and they can happen anywhere. Just a few inches of water can be enough to cause over $10,000 of damage in an average home.
According to FEMA (Federal Emergency Management Agency), more than 20% of flood claims come from properties outside of high-risk flood zones. And 98% of counties in the U.S. have had a flooding event.
Flood insurance is a separate policy that anyone can buy to protect their property—if your community participates in the National Flood Insurance Program. Even though flood insurance is backed by the federal government, it’s brokered by regular insurance companies or agents.
More than 20% of flood claims come from properties outside of high-risk flood zones. And 98% of counties in the U.S. have had a flooding event.
Have a conversation with your insurer about what types of insurance you need and do you homework by getting a flood insurance quote. Most flood policies have a 30-day waiting period, so you can’t wait until a storm is bearing down on you because it will be too late.
Also note that you can’t get flood insurance for vehicles. If you have comprehensive coverage on your car, motorcycle, or RV, any flood damage will be covered.
Mortgage lenders require you to have flood insurance if you buy a home in a designated flood zone. It covers you from flooding whether or not damage occurs as part of a larger event that’s declared a disaster by the federal government.
Remember that water damage from rain, high winds, or a tree that fell on your roof are covered by a standard home or renters insurance policy. But damage to your home or personal belongings that occurs due to rising ground water is never covered, except when you have flood insurance.
If you’re not covered and your area qualifies for disaster assistance, it may come in different forms. Most assistance is not a gift, but a low-interest loan from the federal government that must be paid back.
In some cases, FEMA offers disaster grants to communities and residents that don’t need to be repaid. However, the amount you receive could be insignificant compared to what it costs to recover. Assistance amounts always depend on the severity of a disaster and survivor needs.
Help from FEMA doesn’t take the place of home, renters, business, or flood insurance—nor is it meant to restore your property or belongings to their original condition before the disaster. And to qualify, you may be required to buy and keep flood insurance for a certain amount of time.
FEMA can’t duplicate any benefits you get from an insurer, but gives assistance to help those who are displaced find a temporary place to live and get back on your feet. You can apply for disaster aid at disasterassistance.gov. You can also contact the Red Cross if you’re not insured and need financial help.
Help from FEMA doesn’t take the place of home, renters, business, or flood insurance—nor is it meant to restore your property or belongings to their original condition before the disaster.
You can use FEMA tools to see your state’s flood history and compare the amounts of flood insurance payouts to amounts paid for federal disaster aid. For instance, from 1996 to 2016, in Texas, average flood insurance claim payments were just over $40,000, while free assistance to eligible households and individuals who were uninsured, was just over $7,000 on average.
It’s easy to see that having flood insurance provides much more help when you need it. Check out the FEMA Map Service Center to see if your property is in a flood zone using their interactive online maps.
See also: 5 Ways to Save Money on Home Insurance