Anticipating The Next Disaster
May has already given Texans much to deal with from violent storms. Winds in Houston knocked down massive trees and power lines leaving more than 19,000 people without power. The National Weather Service confirmed an EF-1 tornado packing winds of 105 mph in Guadalupe County. Oh, and June 1st marks the beginning of hurricane season.
Obviously, dealing with any disaster is more manageable if you execute a thoughtful plan ahead of time. Since this can be rather overwhelming, start early and break the project into manageable chunks.
Obtaining flood protection generally requires a separate policy, distinct from homeowner’s coverage. These National Flood Insurance Program policies offer coverage up to $250,000 for a personal residence and $100,000 for personal belongings. However, this is not full replacement cost coverage, but rather depreciated coverage.
When discussing this many people say, “My house is out of the flood plain.” According to the National Flood Insurance Program, more than one-third of federal disaster assistance goes to people outside mapped high-risk flood areas.
In Texas, data shows more than 52% of claims occurred outside designated high-risk boundaries.
Given this, here are action points to protect you and your assets from disaster.
Get moving! It usually takes 30 days to bind coverage—assuming there is not a named storm barreling your way. If there is, you won’t be able to bind coverage until the named threat passes.
Insure for flood even if not in the flood plain.
Get renter’s coverage. Approximately 50% of people who rent a dwelling don’t have renter’s insurance. Your landlord is responsible for the physical premises, but not your possessions. This coverage is quite affordable and covers many perils.
Don’t skimp on coverage limits. In the event of a broad ranging disaster, resources become scarce. Contractors and material prices will cost well above normal ranges. If you built your home for $250 per square foot—you may incur repair costs of $400 per square foot.
Focus on the big picture. Often we keep insurance deductibles low thinking we want someone else to pick up the tab. However, insurance is a math model. The more risk you transfer, the higher your premiums. We’d rather have higher, yet reasonable, deductibles in exchange for higher total coverage. I can replace things that cost a few thousand dollars, but not hundreds of thousands of dollars.
Seek additional coverage. With many homes costing above the basic limits, seek out private flood insurance for homes worth more than $250,000.
Take pictures. Walk through your home and document assets. This is simple and beats having to remember everything after a disaster. Back up pictures to the cloud.
Pick your battles. I don’t want to fight a deep pocketed insurance company. If I have rising water—I don’t want to argue that damage was due to hurricane force winds while the insurance company contends it is from rising water. Get insurance to cover both. It may take time to sort out—but the big issues are covered.
If you get into a fight over insurance or feel your claim is not being treated fairly—contact the insurance commissioner. We have contacted the Texas Insurance Commissioner for clients to investigate unscrupulous or overly hardnosed insurance companies. Once a complaint is filed, the commissioner will investigate. Knowing this, many insurance companies will soften their stance to avoid the commissioner visiting them.
Get collapsible water cubes and fill them up prior to a storm. Anticipate that your water may be cut off.
Have a secondary method to heat food and water. A typical barbeque grill with surplus propane tank will help.
Get a generator and install a transfer switch on your house. Know the set up well enough to run it in the dark.
Get your “bug-out” bag ready. With a disaster, the odds increase significantly that you won’t be able to occupy your residence for some time. Make a list of what you need if you were going on a ten-day trip out of the country. A short list should include medicines, food, important documents, keys, codes, cash, cell-phone and even paper maps.
Not only do you need to plan for the humans in your life, but the furry family members, too.
For a disaster prep list, use this link: https://satherfinancial.com/wp-content/uploads/2020/01/Hurricane-Flood-Emergency-Preparedness.pdf
Dave Sather is a Certified Financial Planner and the CEO of the Sather Financial Group, a “fee-only and fiduciary” strategic planning and investment management firm.
