Disaster-proof
Making sure your finances can withstand a natural disaster
The abundance of natural disasters this year serves as a reminder to protect your financial life from ruin too. Here are a few essential tasks:
1 Review insurance
The vast majority of homeowners do have homeowners insurance but it’s often not enough — especially if their policies haven’t been updated regularly to reflect rising construction costs or improvements. Ask your insurer to rerun the numbers to ensure you have enough coverage to rebuild your home completely.
Renters should also consider renters insurance as their landlord’s policy won’t cover their stuff.
United Policyholders, an advocacy group for insurance customers, recommends adding as much “extended replacement cost” coverage as you can afford. This add-on boosts the policy’s coverage if costs run unexpectedly high, as often happens in disaster zones. Another smart addition: building code upgrade or ordinance coverage to pay the higher costs of rebuilding to current standards.
Another word of warning: homeowners insurance typically doesn’t cover floods or earthquakes, so consider buying those policies if your home may be at risk.
2 Scan important documents You may be away from home or unable to grab important documents in your scramble out the door.
Keeping documents or copies off site is one solution, but your safe deposit box or lawyer's office could be compromised by the same disaster, says financial planner Leonard Wright, who evacuated his family from their San Diego-area home during the 2007 wildfires.
Consider file sharing and cloud storage sites to store copies of important documents. This may include: insurance policies, passports, birth certificates, family photos, tax and loan documents, stocks and bonds, wills and trusts.
3 Do a quick home inventory
This can be as simple as walking around your home, inside and out, recording your stuff with your smartphone’s video camera and storing that video in the cloud. Or you can use an app, such as Sortly, MyStuff2 or United Policyholders’ UPHelp Home Inventory to photograph and itemize your possessions.
If you have items of exceptional value — such as antiques, artwork or jewelry — talk to your insurer about additions to your policy to make sure these are adequately insured.