A big emergency like a hurricane or earthquake can be hazardous to more than just your life and your home, according to the National Foundation for Credit Counseling (NFCC). It can also impact your finances—and your credit score, if you are unable to pay bills for a period of time.
This may not seem like such a big deal, in comparison to the other things that can happen when a big storm or other natural disaster hits. However, financial disasters are real as well, and can have a long-term effect on people’s well being.
As with anything else, the most vulnerable people are those who are unprepared. There are steps folks can take to ensure they are ready in case the worst hits. The NFCC recommends consumers take the following steps now, to protect finances in the event of a natural disaster down the road:
• Make sure you have adequate insurance coverage, and that you fully understand the terms of your current policies and deductibles. Speak to an agent if you need better coverage, or want to understand the finer points of your current insurance coverage.
• Consider additional insurance coverage for earthquakes, fires, wind, hail, flood, and other things that may not be covered by a standard insurance policy.
• If you own your home, think about purchasing full replacement or replacement cost coverage, rather than cash value coverage. This protects you from losing money due to depreciation in value. If you rent your home, you should be sure to purchase renters insurance to cover your belongings.
• Keep an inventory of your household items somewhere outside your home. Take pictures, make a video, and keep them in a secure location, or online, so you can easily remember what you had, in the event your home is damaged or destroyed. At times like that, it’s hard to rely on memory alone.
• Have an evacuation plan in place and make sure your whole family is aware of the plan. Consider transportation costs, logistics, and how far away it will be necessary to go in order to be safe.
• If there is a storm warning, fill up your gas tank right away. In the event of a natural disaster, there will inevitably be lines at gas stations, and there may be a fuel shortage. Avoid being stranded by having a full tank when the storm hits.
• Have some cash stashed. If you need to leave your home and electricity is down, you can’t rely on getting money from an ATM or using a debit or credit card.
• If you are unable to pay your credit card bill because of a natural disaster, contact your credit issuer to explain the situation and make a payment plan once the danger has passed.