You don’t know what you don’t know about insurance.
Leonard Wright, a member of the American Institute of Certified Public Accountants, said that unfortunately, many consumers think they have a certain type of insurance coverage but they find out that they’re not really covered for that expense when a disaster hits.
“The question is, ‘What does the policy really cover?’” said Wright, a CPA and personal finance specialist in San Diego.
“A lot of people think they have more coverage than they do,” Wright said.
Talk with your insurance company and read the policy to evaluate what is really covered before an emergency hits.
A standard homeowners insurance policy does not cover floods, for example, even though many think it does.
But experts note that some damage might be covered in the case of high winds. If wind rips the roof off a home during a hurricane, water damage to your interior may be covered.
Flood insurance can be bought through the National Flood Insurance Program if your property is in a participating community. You can talk with your agent or go to fema. gov.
Penny Gusner, consumer analyst for Insure.com, said homeowners and renters need to understand that flood insurance does not kick in immediately, so you can’t buy it when a storm is heading your way. In most cases, there’s a 30-day waiting period.
Another key point: Consider purchasing special riders for sewer backups that can hit during storms. Sewer backup coverage averages around $50 annually, according to the Insurance Information Institute.
Flood damage to a vehicle is typically covered under the comprehensive portion of an auto policy, according to Susan Hiltz, a spokeswoman for AAA Michigan.
Be wary of getting tricked into buying a flood-damaged vehicle.
Michigan Attorney General Bill Schuette warns that damaged vehicles can show up online, at used car lots or at car auctions.
Scammers have been known to launder vehicle titles, so a clean title does not always prove that a car was not in a flood or previously damaged.
After Hurricane Katrina in 2005, consumer watchdogs noted that truckloads of flooded cars and trucks were shipped out of Louisiana to other states, where they were cleaned up before sale to unsuspecting consumers.
But water can damage airbag sensors, electrical systems and brakes — and trouble might not show up right away.
A sign of flood damage might include the smell of mildew or even a heavy scent of air fresheners, water stains under the gas pedal or other hard-toreach areas, or the car running roughly.
Check the vehicle identification number and trace the car’s history through the National Motor Vehicle Title Information System.
Experts warn that consumers should inspect the vehicle’s paper title before they buy the vehicle and see if the car is branded as “junk,” “salvage,” “flood” or “rebuilt.”
Don’t let scammers tug at your heartstrings to pull cash out of your wallet.
Social media, of course, only make it easier to exploit the good hearts and giving nature of many people.
The Better Business Bureau warns that scammers closely track storms like those in Texas, knowing that people want to react quickly to help.
Melanie Duquesnel, president and CEO of the Better Business Bureau for eastern Michigan, said consumers need to carefully review some profiles on GoFundMe, where in some cases supporters seem to have no relationship to those in need.
When giving, it can help to evaluate a charity at the Better Business Bureau’s site called Give.org or use other online tools, such as the Internal Revenue Service’s Exempt Organizations Select Check at irs.gov.
GuideStar lists some possible options for giving to disaster relief and recovery at its site at GuideStar.org. The names on the list are not an endorsement by GuideStar. But GuideStar said it has confirmed that the IRS recognizes each of the organizations as tax exempt, and that each one is involved in Hurricane Harvey recovery.
GuideStar’s list includes All Hands Volunteers, American Red Cross, Central Texas Food Bank, Convoy of Hope, Houston Humane Society, and United Way of Greater Houston.
One can never say it enough: Be prepared.
Many people who remember the Northeast Blackout in 2003 can recall how no one could get money out of an ATM shortly after that power outage.
Without power, it’s back to a “cash-only” economy, said Greg McBride, chief financial analyst at Bankrate.com.
Some banks will set up “mobile branches” after a disaster at times. But a prepared household keeps cash on hand in addition to an extra flashlight and first-aid kit.
One guideline: You might want enough cash to cover three days of living expenses.
“Depending on size of your family, it’s best to have a few hundred dollars in order to buy food, water and supplies needed for cleanup after the storm,” McBride said.
Remember, without power, gas pumps don’t work even if the stations do have gas. And stores may not be able to take credit cards if those payment networks aren’t running, he said.
Another tip: A “Disasters and Financial Planning” guide was published by the AICPA, American Red Cross, and National Endowment for Financial Education. The guide, which can be overwhelming, provides a useful checklist to better understand homeowner’s and health insurance coverage in the event of a disaster. It also gives information on how to protect your records.
Watch out for the wave of con artists.
Scammers love to chase after the big insurance claim checks that move into any area after a major storm or disaster.
The North American Securities Administrators Association warns that sometimes an email or an unsolicited phone call will pitch investment pools or bonds supposedly designed to help storm victims or strategies for making money on water-removal technologies and distressed real-estate remediation programs.
Regulators can point to plenty of cases of investment fraud after Hurricane Katrina.
A man in Montana sold phony investments in the guise of helping victims of Katrina. Another scammer in Texas pitched a plan to refurbish Federal Emergency Management Agency trailers to resell them to the U.S. Department of Housing and Urban Development at a significant profit. A man in Hawaii paid his mortgage and covered yachting expenses after taking money from investors to rebuild housing in Mississippi following the destruction of Hurricane Katrina.
So watch out in the months ahead after the troubling scene in Texas.
“Unsolicited investment offers seeking to capitalize on the aftermath of Hurricane Harvey should be approached with extreme caution,” said Mike Rothman, NASAA president and Minnesota commissioner of commerce.
“The potential for fraud remains even after the skies have cleared,” Rothman said.