Batten down your finances for hurricane season
Everyone knows to board up windows and stock the pantry with canned goods when a serious storm is approaching.
But you've also got to be financially prepared to weather a hurricane, and the best time to do that is right now, not when one's threatening to turn your life upside down.
We often say that the three biggest threats to every family's financial security are divorce, job loss and illness. Catastrophic storms are probably a close fourth.
If you live anywhere along the Gulf of Mexico or Atlantic coasts, these smart moves can help you bounce back from the worst Mother Nature might throw at you.
Smart move 1. Find and organize your insurance policies.
Put your homeowners or renters insurance along with auto insurance documents into a big envelope that you can easily grab if you have to evacuate.
Hopefully, you have flood insurance to toss in there as well, because homeowners insurance does not cover many kinds of water damage.
If you don't have an inventory of your belongings, now is the time to make one.
You can use Know Your Stuff, a free online home inventory software from the Insurance Information Institute.
The next-best option is to record the contents of your house in a room-by-room video tour.
Smart move 2. Know your homeowners deductibles and coverage.
Insurers charge bigger deductibles for hurricanes than other sources of damage, such as fire and theft.
You're typically on the hook for 2% to 5% of your home's insured value before the insurance company pays a dime.
For a $250,000 home with a 5% deductible, the owner would be responsible for the first $12,500 in repairs.
That’s a lot and it's almost always more than most homeowners expect. So don't be surprised. Know exactly what your share of repairs will be before a storm strikes.
Hurricane deductibles usually kick in when the National Weather Service issues a hurricane watch or warning for your area.
Read your insurance documents closely because the "trigger" can vary by state and insurance company.
After the storm, it can take weeks, or even months, to get a check from your insurance company, even if you think it's being fair in assessing the damage you've incurred.
If you wind up in a dispute over how much you're owed, it can take years for internal appeals and lawsuits to be resolved.
Our point is this: Many homeowners must pay for repairs out of their own pocket and wait to be reimbursed by their insurers.
Planning for this by having a significant emergency fund and home equity line of credit available to you (more on this later) can make a big difference in how quickly you can make your home livable again.
Smart move 3. Pay special attention to your auto insurance.
Any havoc a hurricane wreaks on your car or truck will be fixed under your auto policy's comprehensive coverage.
If you only have liability insurance and your vehicle winds up in hood-deep water or crushed by a tree, your insurer will not owe you a dime.
Insurers usually total any vehicle that’s flooded to a certain height for a given period of time. So if your car sits in three feet of water for five hours, it's likely to be declared a total loss.
In that case, you'll typically be reimbursed for its current market value minus your comprehensive deductible, which is typically $500 to $1,000.
Smart move 4. Get your emergency fund ready to use.
By now, it should be obvious that you'll need to tap your emergency fund if a hurricane blows through town.
Indeed, you many need a lot of that money very quickly.
Make sure it's in a savings or checking account that's easily accessible through a debit card in your wallet, a spare book of checks in your evacuation envelope and the bank's app on your smartphone.
Trust us. You'll need all of the money management tools you can muster in the wake of a bad storm.
You'll also need cash.
Every hurricane triggers a run on ATMs. It's not long before they're empty, broken or both.
After the storm passes, it can take days, sometimes weeks, for the banks to get them restocked and back in working order. And that assumes the power's not out, which renders all of them totally useless.
Drop at least a few hundred dollars into your evacuation envelope right now, and leave it there until fall.
Smart move 5. Consider how to borrow extra money.
Even if you have $10,000 in your emergency fund, you could wind up needing $25,000, $50,000 or more for everything from repairs to living expenses if your insurance settlement gets tied up and your paychecks stop coming. (More on that later.)
A home equity line of credit is a good way to back up your emergency fund.
You access the money by writing checks, and while you'll have to pay interest on any outstanding balance, those rates are far lower than for credit cards.
Speaking of credit cards, they can be a great short-term loan to cover unexpected expenses in a disaster if you use them carefully.
We stress "short-term" and "carefully" because you'll only avoid their steep interest rates by paying off the debt in one billing cycle, usually 30 days or less.
A credit card will allow you to immediately buy a generator or repair materials and carry those costs over for a few weeks until your insurance kicks in.
Tuck those extra cards in your wallet, too.
Smart move 6. Have a repair plan.
It's a good idea to prepare for the worst and have a repair plan.
If you had a hole in your roof or a tree on your car, whom would you call?
Use your smartphone to create a list of roofers, carpenters, landscapers, dry wallers, heating and cooling contractors and other handymen who have done work for you in the past.
Fill in any holes by asking your neighbors or friends for recommendations, and make an effort to maintain your professional relationships with those craftsmen.
You want to be a known and valued customer when you need help after a storm.
If you don't have those connections, you'll probably be pushed down any call-back list and be forced to use the armies of out-of-town workers that descend on storm-battered communities.
Smart move 7. Be ready to apply for assistance.
You don't have to be poor to qualify for help from the Federal Emergency Management Administration.
Many middle-class families qualify for emergency relief funds or loans to cover things like temporary housing, repairs and food.
Few people can survive the financial blow of losing everything. Don't think it can't happen to you, and don't let pride prevent you from taking help.
If you've been paying federal taxes your whole life, you shouldn't hesitate to take full advantage of federal relief funds. Be prepared to act quickly because there's often a backlog with big emergencies.
After your community has been declared a disaster zone, you'll be able to apply at DisasterAssistance.gov. Put that link in your smartphone and tablet.
You'll need to fill out an extensive application with things like income, assets and debts.
You may need account numbers and bank addresses, things you normally don't have on hand, especially if you're in a hotel hundreds of miles from home.
So spend a few minutes and put that in your phone and tablet, too.
Smart move 8. Have a plan to get back to work.
Hurricanes wreck offices, warehouses and factories, too.
If that happened to your employer, would you be able to work remotely or transfer to another location? Would you continue to be paid?
Ask your company if it has a disaster plan, and ask yourself if you could survive without a paycheck for a few weeks.
Disaster Unemployment Insurance covers those who lose their source of income due to hurricanes.
Benefits vary by state but are often 50% or less than your salary. It starts with the first day of the week following the disaster and can continue to pay up to 26 weeks.
You'll have to factor in potential loss of income into your emergency funds or lending options.
If you're self-employed and leave town, be sure to bring your computer and documents so that you can work from elsewhere if need be.
Let your clients know the situation.