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Insurance Matters: Are You Protected Against Disaster?

Hurricane season is off to a quick start with Subtropical Storm Alberto pushing its way north across the United States—bringing with it serious flooding in parts of the country. Even if you don’t live on the coast, nearly everyone is at some level of risk, as 98 percent of all U.S. counties have experienced floods to date. Don’t wait until disaster befalls your family to find out if you’re covered. Here are three steps you can take to protect your property and ensure you have a speedy recovery when disaster strikes.

>>> If you’re currently recovering from a recent disaster, check out the Consumer Financial Protection Bureau’s Post Disaster Toolkit for more financial tips and resources.

Check Your Coverage

Having the right insurance coverage is the best thing you can do to protect household finances from disaster. Why?

  • Federal assistance is limited. FEMA disaster assistance grants are available ONLY when a federal disaster declaration has been issued, and the MAXIMUM grant a household can receive is $34,000; most households receive much less than the maximum.

  • In contrast, insurance pays out ANY time you have a qualifying loss. During flooding events (the most common disaster in the U.S.) the FEMA grant average is $4,600 vs. flood insurance claim payout average of $43,000.

Whether you’re a homeowner or renter, you want to make sure you have sufficient coverage for all of your property AND for any damages you may face, especially flooding. Here’s what you might not know.

  • Flooding IS NOT covered by your homeowners or renters insurance policy, so you’ll have to purchase a separate flood insurance policy to be covered..

  • The average annual cost of a flood insurance policy is about $800. The potential cost you can expect without flood insurance is an estimated $10,000 for the first inch of flood water in a small home, and upwards of $25,000 in average-sized home.

  • Flood insurance has a 30 day waiting period before coverage goes into effect, so you don’t want to wait until there’s a major storm in the forecast to consider getting covered.

  • To file an insurance claim, you’ll need to submit a home inventory to get compensated for damages. You can do this simply by pulling out your phone and taking a video of all the rooms in your home. Just make sure you get everything of value on film.

>>>For more information on completing your home inventory, CLICK HERE.

Start Saving For Your Deductible

A deductible is the amount of damages you agree to cover out of pocket before your insurance kicks in. You generally have one for each insurance policy. To make an insurance claim and be compensated, you must meet the following criteria:

   1) Your losses must be GREATER than your deductible

   2) You HAVE TO pay your deductible amount

Know what you will owe and start saving.

  • Look at all of your insurance policies (homeowners/renters, flood, auto, etc.).

  • What would you owe in a worst-case scenario if you had to pay all of those deductibles at the same time?

  • What do you need to save to get there? Setting aside even small amount each week adds up over time.

Emergency Cash

Having cash on hand can make it easier to get basic necessities in the event of an emergency. Power outages or building damages may make it difficult to access banks and ATMs, and stores able to stay open may only be able to accept cash if their credit card processing systems are down.

  • Think about what your household’s cash needs would be if you had to evacuate for a few days (e.g., food, water, gas, hotel, and other basic necessities).

  • Start setting aside what you can afford now and build up your fund to what you think would cover you and your family for a few days away from home.

  • Remember, small bills are best.

Now that you know you to protect yourself, it's time to take the first step. Make sure you have the right insurance policy. Find out how much your insurance deductibles are and start setting money aside. Finally, stash some cash for emergencies so you don’t get stuck trying to swipe your cards when the power is out.

For more disaster preparedness resources, CLICK HERE.