Preparing for the Unexpected: Important Money Tips to Help Safeguard One of Your Largest Investments

From education costs to retirement and everywhere in between there are no shortages of life events to consider, that do not bring with it either large financial influxes or expenditures. Perhaps the one common event that demands significant attention and planning that can span over decades of your life regardless of age or financial standing is the ownership of your home.

For many people and families, the purchase of their home will be largest purchase of their life. It may also constitute the biggest chunk of your net worth.

Similar to how stock markets are susceptible to volatility, bear markets, and corrections, your home is also vulnerable to accidents, and natural disasters such as floods, fires, tornados, and hurricanes among others.

While no one can predict when disaster will strike, there are steps homeowners can take to strengthen the protection around their money. Below are six actions to consider before, during, and after an emergency.

1. Review Your Homeowner’s Insurance Regularly

A home is one of the most significant investments you can make, yet many homeowners rarely review their insurance policies after purchasing them. As property values rise and renovation projects enhance homes, existing coverage may fall short, leaving homeowners exposed to financial risk if disaster strikes. Taking the time for an annual review can help ensure adequate protection.

Consider these key questions when evaluating your policy:

• Does your policy cover the full replacement cost of your home, especially if property values have increased?
• Have you made home improvements or additions that require extra coverage?
• Do you own high-value items (jewelry, collectibles, or artwork) that may need separate coverage?
• Are there discounts available for safety upgrades or bundling policies with the same provider?

2. Protect Important Documents

A fire or flood can erase important belongings in seconds, including your insurance documents and/or computer files. Consider purchasing some damage-proof- or reduced-proof lock boxes or safes to protect these items. This type of protection can be rather inexpensive and purchased online.

3. Act Quickly

The aftermath of a disaster can be overwhelming, but acting swiftly can make a significant difference in the claims process. Insurance companies handle claims on a first-come, first-served basis, and during large-scale disasters, delays are inevitable. The sooner a claim is filed, the sooner homeowners can begin the recovery process.

To ensure a smooth claims process:

• Contact your provider immediately to start the claims process.
• Inquire about Loss of Use coverage to secure temporary housing assistance.
• Keep track of all claim-related communications and deadlines.

4. Document Everything for Your Claim

When disaster strikes, emotions can run high – making it difficult to consider things like gathering evidence for an insurance claim. But thorough documentation is essential for a successful claim. The more evidence homeowners provide, the stronger their case for reimbursement. Without proper records, proving losses to an insurance provider can become an uphill battle.

To strengthen a claim:

• Take detailed photos and videos of property damage as soon as it is safe to do so.
• Keep receipts for any emergency expenses, including temporary housing, food, and essential purchases.
• Create an inventory of lost or damaged belongings to substantiate your claim.

5. Manage Household Expenses During Displacement

When forced to leave home due to damage, financial responsibilities don’t pause. Mortgage payments, utility bills, and other recurring expenses may continue, even if a home is uninhabitable. Being proactive in managing these obligations can help prevent unnecessary financial strain.

To stay financially stable during displacement:

• Contact utility companies to suspend or adjust services for a damaged home.
• Notify your mortgage lender and discuss temporary payment options if necessary.
• Review insurance coverage to understand reimbursement for living expenses while displaced.

6. Explore Federal and Local Assistance

After a major disaster, government agencies often provide financial relief to help affected individuals recover. Knowing what assistance is available can ease the burden and provide additional support beyond insurance payouts.

Some key resources include:

• FEMA: May offer federal disaster assistance, including housing aid and grants.
• IRS Tax Relief: Under the SECURE 2.0 Act, affected individuals may withdraw up to $22,000 from retirement accounts without penalty, with tax repayment options.
• Property Tax Adjustments: Check with local assessors for potential temporary relief.

No one anticipates facing a natural disaster, but preparation can make all the difference. By regularly reviewing insurance policies, understanding available resources, and taking proactive steps, homeowners can minimize disruption and financial hardship when the unexpected occurs.