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The start of a New Year is the time to make resolutions to get organized and generally do things better. This year the weather patterns are unusual due to the influence of El Niño. Some parts of the country are bracing for above-normal temperatures, while others are at higher risk for ice storms. What would you do if the weather took a turn for the worse? Could your finances survive a natural disaster?
No one knows when an emergency will occur that will result in an interruption to your normal routine. Hopefully this type of situation will never happen in your area, but you should take news reports as an incentive to ensure that you and your family are prepare in case a similar event occurs near you.
How to Help your Finances Survive a Natural Disaster
Here are some steps you can take to keep your home and possessions safe and secure.
1. Store your important financial papers off site.
Don’t keep your bank statements, investment information, insurance policies, powers of attorney and your will at home. If your home is damaged or destroyed, you will lose access to this important information. Rent a safety deposit box at your bank for a nominal cost instead and make sure these papers are kept in a secure location.
It’s a good idea to have digital records as a back up to the paper versions. You can scan your documents and then store them as electronic files to use when paper records are not accessible.
2. Make a point of documenting your home’s contents.
Can you describe the items in your home? Do you remember the make and model of each one? Would you be able to provide accurate information during a time of extreme stress? It would be very challenging to remember all the details at a time like that.
If you are going to make a claim against your homeowners’ insurance policy following a natural disaster to replace your contents, you will need to describe your loss accurately. You can start by recording the valuables in your home, especially the big ticket items. Make note of the details and place the information in your safety deposit box and/or videotape of all your possessions.
3. Review your insurance coverage with your financial advisor.
You will want to make sure you have the right coverage in place before a natural disaster strikes. Be sure to ask whether your property insurance policy covers you for specific events like a flood (Vancouver residents need to be mindful as they say the next big earthquake is just around the corner). You will also want to make sure your policy provides enough coverage for any big ticket items you own, such as jewelry, art, or cameras.
You will also want to ensure you have enough life insurance and disability coverage in place. No one wants to think about dying or possibly becoming disabled but planning for these things are part of making sure you are prepared for a natural disaster. It’s a good idea to review your personal insurance regularly and to modify your coverage when needed.
4. Make sure your will and power of attorney are up to date.
These documents need to be updated from time to time as circumstances in your life change. Your family may have grown or a beneficiary may have passed away since you drafted your original will. Your assets may have changed, and you will want to ensure that these documents reflect your current estate.
5. Have easily accessible emergency funds.
You will want to make sure you can access some cash in an emergency. You may not be able to use your credit or debit card right away if a natural disaster occurs. It’s a good idea to have an emergency stash somewhere safe so you will have a backup in case you have to leave your home in a hurry.