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How do I financially prepare for natural disasters?


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No one wants to face a natural disaster, but a little financial preparation can go a long way toward putting your mind at ease. 



Prepare Your Home 

Insurance is necessary, but minimizing damage to your property is even better. Get on track to make your home disaster-ready with Disasters and Financial Planning: A Guide for Preparedness and Recovery.

Insurance

Make sure you have homeowners insurance, and read the policy. If you see any holes in coverage, you may want to purchase supplemental coverage depending on the risks in your area. Common supplemental coverages include:

  • Flood Insurance. Unfortunately, the more likely you are to need flood insurance, the higher the premiums will be.
  • Subsidence Insurance. If you live in an area that has been heavily mined for natural resources, there is a possibility that the land beneath your home could open up or that local authorities could condemn your home for the potential of ground movement.
  • Earthquake Insurance. To see if you live in an at-risk area, check seismic hazard maps

Know What You Own

If you have to file an insurance claim, you will need to know what to claim. The best way to document this is to take a video tour of your home, being sure to open drawers and cabinets as you go. 

Store Your Records Digitally

While you should keep paper records of certain documents, the hard copies could be destroyed during a natural disaster. Scan your paper copies and store them on an external hard drive or in a cloud-based storage such as Google Drive or Dropbox. Include a video record of what you own and a document including policy and contact information for your insurance company. 

Give the stored information to a trusted friend or family member who lives outside of your area. Password protect the documents as you feel necessary. 

Emergency Fund

Be sure your emergency fund has enough money to cover insurance deductibles and other items that your policy may not cover. 

Have Cash on Hand

Because ATM machines may be out for a few days after a natural disaster, it’s a good idea to always have some cash on hand in small bills. 

Set Up Auto Bill Pay

You may not be able to access your financial institution for some time, either online or in person. Automatic bill pay can save you stress. Be sure to have it linked to your emergency fund in case of overdraft. 

Store Nonperishable Food (and Water)

In the event of a natural disaster, food may be hard to come by. Building up food storage in case of the worst doesn’t have to bust your budget. Pick up one nonperishable item each time you go to the grocery store so your wallet won’t feel the pinch. Be sure to remember water, too! 

Bug-Out Bag (Grab-and-Go Box)

A bug-out bag (also called a grab-and-go box or 72-hour kit) is another good item to have on hand. In it, you should have enough food and survival supplies for your family for three days should you need to flee. You can build your bug-out bag much like food storage: one item at a time.