When a natural disaster strikes, there are a lot of things you have no control over. The tree that falls down outside your home. The internet and power that go out unpredictably. The dog that needs to go for a walk when the wind gusts are at 85 miles per hour.
But there are many things you can do before a disaster strikes to prepare yourself and make sure that you and your loved ones are in the best possible position to handle whatever may happen.
In light of the recent events and damage associated with Hurricane Sandy, we wanted to make sure that you had a plan in place to protect yourself. Whether you've been fortunate enough to avoid experiencing a severe natural disaster or you realize that you need a better plan in place the next time one hits, here are the three steps you should take.
1. Make Sure You Have the Right Kinds of Insurance
Depending on your individual living situation, you may need different types of insurance to protect your home and your belongings.
If you own a home, chances are that you have some level of homeowner's insurance (most lenders require it). To find out how much homeowner's insurance is enough, read this. Make sure you understand what your policy covers and what isn't covered. Talk to long-time homeowners in your neighborhood to get a good sense of what natural disasters have affected owners in your region. If you find that your policy does not cover damage related to flood, tornadoes, hurricanes or earthquakes, you may need to purchase additional disaster protection (see below for more details).
All renters should have renter's insurance; monthly costs can be as low as $10 per month. If your apartment floods and your belongings are ruined, renter's insurance will help you to replace your possessions; your landlord will be responsible for damage to the structure itself. Make sure you understand what your plan covers: Certain types of flood, for instance, may not be covered. Based on recent events or discussions with other renters in your neighborhood or building, you may want to shop around for a more comprehensive plan or try to purchase additional protection.
Once you take a good, hard look at your homeowner's insurance and talk with long-time residents of your neighborhood, you may realize that you are not happy with your coverage when it comes to damage due to earthquakes, flood, wind damage and sewer backup. In this case, you should consider purchasing additional protection to cover your home from the types of damage you could potentially foresee affecting your home.
The price of additional protection may give you pause: Earthquake insurance premiums can cost from $100 to $3,000 annually depending on where you live, while flood coverage can cost around $570 annually. SmartMoney reports that you should consider whether you stand to lose more paying premiums or saving that money to pay for potential repairs should disaster strike. That will all depend on your property and where you live. So, do the math, and if you decide not to purchase additional coverage, make sure that you've saved an appropriate amount of money given your individual situation.
2. Understand the Risks Associated With Your Neighborhood
The bad news is that natural disasters seem to be increasingly common, thanks to global warming. And TIME reports that this trend is even more troubling once you consider that coastal areas, which may suffer the most extreme disasters, are becoming ever more densely populated.
If you are considering moving to a new neighborhood, city or state, make sure you are comfortable with the natural risks associated with those areas. Neighborhoods in New York that were hit the hardest, like lower Manhattan, Battery Park, Red Hook and Dumbo are very popular neighborhoods, in part because of their proximity to the water, but that also means your property will be more at-risk if it's at or near sea level. Make sure you understand the risks attached to your neighborhood, be they low elevation, proximity to a fault line or nearness to a flood zone.
3. Have an Emergency Fund
Saving an emergency fund (at least six months of net pay) is important for many reasons, like if you lose a job, your car breaks down or you have to pay off an unexpected medical cost. We know, sometimes having a rainy day fund seems like the least important thing to save for—but it's for times when more than a rainy day strikes (like this week) that make it necessary. Should you be affected by a natural disaster, it will protect you from sinking into debt should you be displaced from your home, need to replace items not covered by insurance or are unable to work due to the disaster.
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