"Before Disaster Strikes...
How to make sure you are financially prepared to deal with a natural disaster"
Published by the American Red Cross,
the Federal Emergency Management Agency,
and the National Endowment for Financial Education
Natural or other disasters can strike suddenly, at any time, and anywhere. Your first priority, of course, would be to protect your family and your property. But it’s also important to protect against the financial consequences of a disaster. A disaster can damage or destroy your property, force you to temporarily live somewhere else, cut the flow of wages and other income, or ruin valuable financial record.
First things first
One of the first things to do is find out what disasters could strike where you live — fire, flood, earthquake, hurricane, or tornado, for example. The following steps can help you avoid or reduce substantially the potential physical destruction to your property if you were to be hit with a disaster. These steps can reduce your insurance costs, too. For example, you could:
- Install smoke detectors to warn of an apartment or home fire.
- Elevate utilities to upper floor or attic.
- Clear surrounding brush to protect your home against wildfires.
- Anchor your house to the foundation, and anchor the roof to the main frame.
- Secure objects that could fall and cause damage in an earthquake, such as a bookcase or hot water heater.
- Install hurricane shutters on windows, and prepare plywood covers for glass doors.
- Cover windows, turn off utilities, or move possessions to a safer location if you have adequate warning of something like a hurricane or flood.
- Have your house inspected by a building inspector or architect to find out what structural improvements could prevent or reduce major damage from disasters.
Conduct a household inventory
Inventory your household possessions by making a list of everything you own. If disaster strikes, this list could:
- Help you prove the value of what you owned if those possessions are damaged or destroyed.
- Make it more likely you’ll receive a fast, fair payment from your insurance company for your losses.
- Provide documentation for tax deductions you claim for your losses.
Buy insurance
Even with adequate time to prepare for a disaster, you still may suffer significant, unavoidable damage to your property. That’s when insurance for renters or homeowners can be a big help. Yet, many people affected by recent disasters have been underinsured — or worse — not insured at all. Homeowners insurance doesn’t cover floods and some other major disasters. Make sure you buy the insurance you need to protect against the perils you face.