10 Ways to Prepare for Nature's Worst
Earthquakes, floods, tsunamis, hail, hurricanes, tornadoes and lightning strikes are just a few of the nasty surprises that nature can whip up. Unfortunately, bad weather can affect anyone. It is important to prepare for both large-scale and small-scale natural disasters so that when the damage is done, you have the means to pick up the pieces and rebuild your portfolio – and your life.
Be Sure of Your Insurance
The biggest wake-up call for homeowners is the fact that homeowner's insurance covers a very limited set of circumstances. Policies often do not include all the natural disasters that could occur in your area. Carefully read the fine print of your insurance contract to ensure you are not underinsured when it comes to a disaster.
Full Replacement Coverage
At the very least, you should have full replacement or replacement cost coverage policies. These policies will cover the cost of replacing your home or other insured buildings. Pay attention to the limits of the policy because they will define what kind of further coverage you may need. If you live in an area that regularly suffers disasters, such as earthquakes and/or floods, you might want to pay the additional premiums for them. For more, see How Much Homeowners Insurance Should You Carry?
Keep Your Coverage Up-to-Date
Once you have your home coverage with all the relevant policies, you will need to have your home reassessed every few years to make sure that your policy reflects the true value of your home. Renovations, such as building an addition or finishing your basement, will also require a policy update.
Cover the Knickknacks
For the best insurance records, consider keeping a detailed list of the contents of your home and update it yearly. The list should include serial numbers, photos and descriptions of everything – even the fixtures. This will expedite the processing of any claim you may file and serve as documentation for your tax losses and deductions. For expensive items such as antiques, jewelry or art, you may want to consider separate coverage.
Cover Office Equipment Separately
If you have a home office, you can get affordable business coverage to protect the equipment you use for your business, rather than putting it under your basic home policy.
Renting? You Still Need Coverage
If you are a renter, the insurance that your landlord carries will cover damages to the building, not to your personal possessions. Renter's or tenant's insurance can be pretty cheap, so be sure to shop around for the best policy and the best price. Look for policies that cover more than the replacement of your possessions, as you could encounter costly relocation or living costs while you wait for your apartment to be repaired. (To learn more, read Are You Ready to Rent? and 6 Good Reasons to Get Renter's Insurance)
Keep Your Documents Safe
With the exception of your will, which should be kept by your attorney or local registrar's office, its a good idea to rent a safety deposit box for the originals of all other important documents. This includes your marriage license, home deed, birth certificates and other original legal documents. Keeping these in your home puts you at risk of having them stolen or destroyed by fire, floods, or other disasters. For more, see Eight Financial Safeguards If Disaster Strikes.
Create an Emergency Kit
An emergency kit is a small and compact package of things that you would want to bring should you need to flee from a disaster. It should contain copies of important documents, enough traveler's checks to make it through a few days at a hotel until you find a bank, copies of necessary prescriptions, health and dental insurance cards, credit/debit cards, computer backups of your financial records, and a copy of your most recent federal and state income tax forms. Because your kit contains all your personal information, it's a good idea to keep it locked in a safe.
Create a Wish List
Take the time now to make a wish list of items to take in the event that you have some time to collect a few select items before you need to flee. This can be anything from photo negatives or CDs full of your family photos, jewelry, or any other items that are important to you that could be easily stuffed in a bag and are not easily replaced.
Preparing for unexpected events may sound impossible, but there are many other things you can do beyond insurance and keeping your important documents safe. Home upgrades, such as hurricane shutters and moving wiring to the attic, can reduce damage in the event of certain disasters and also lower your insurance premiums. (For more, see Five Insurance Policies Everyone Should Have and Insurance Tips For Homeowners.)
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