Homeowners May Be Underinsured for Weather-Related Disasters
The growing threat from climate-related disasters, paired with the risk of being underinsured, can be financially devastating for homeowners. Last year alone, natural disasters cost the country $91 billion in disasters ranging from wildfires to hurricanes. According to industry consultant Marshall & Swift/Boeckh, publisher of the Residential Cost Handbook, 64 percent of homes are underinsured by an average of 27 percent.
Summer is peak season for weather-related disasters but also other forms of home damage—so real estate professionals may consider counseling their customers on purchasing adequate coverage for existing homes, as well as sales or pending sales.
Homeowners should periodically check their insurance, says Amy Bonitatibus, chief marketing & communications officer, Home Lending at JPMorgan Chase. Know what your insurance coverage is in case of a flood, tornado, earthquake or other natural disasters? When is the last time you updated your policies?
She suggests homeowners assess their readiness in these areas:
• Collect your vital paperwork: Surviving a disaster—and rebuilding afterward—can require a host of documents, from car registrations to birth certificates, to insurance policies, and health insurance cards. To prepare, compile physical and virtual copies of all your vital paperwork. Make sure you have the title to your house, if possible.
• Build an emergency fund: Disasters can be expensive, both before and after they happen. To handle the costs of disasters, the average US family should have a buffer of about $2,400.
• Have cash on hand: In past events like Hurricane Sandy, it took weeks to fully restore electricity to some communities. While you should be able to access your credit and debit cards soon after a disaster, it doesn't hurt to keep a small fund of cash or traveler's checks on hand, in case of an outage that separates you from your money.