Why Florida Residents Need a Hurricane Plan for 2018
The Atlantic Hurricane season started on June 1st. Many experts project an activity level of average to above average this season.
This is troubling news for those that live on the East coast & Gulf coast of the United States. Not too long ago, there were evacuations in parts of Florida, Mississippi, Alabama, Louisiana, and Texas. Thousands of people lost their homes, personal belongings, sense of community…and some even lost their lives.
The recovery is still ongoing in some parts of the Atlantic. Islands in the Caribbean, in particular, Puerto Rico, face challenges from last year. There are still thousands without power as we head into the heart of Hurricane season. The city of Houston is still reeling from the record flooding brought by tropical storms.
These are all stark reminders of the importance of having a hurricane plan in place. You might think that you don’t need one; after all, you can see hurricanes coming weeks in advance, right?
Never Underestimate Unpredictability
Ask someone from New Orleans or Florida about the unpredictability of hurricanes. Katrina wasn’t supposed to hit New Orleans…by the time forecasters recognized the change in direction, it was too late for thousands of people.
Last year, projections showed Hurricane Irma to grazing the east coast of Florida. Within 24 hours, it had reached the Florida keys and was on its way to Tampa Bay. It wasn’t until right before landfall that Floridians realized the storm was going to cut through the middle of the state.
There’s a difference between “seeing them coming” and knowing where they are going to end up. Being unprepared is a dangerous game to play.
The 4 Approaches To Risk Management
There are four ways someone can look at risk management:
Ignore the risk. Live and let live. Whatever happens, happens. This is, for obvious reasons, the worst way to view risk management.
Reduce the risk. Develop a plan in case disaster strikes and test it.
Eliminate the risk. Don’t live in an area where there are hurricanes. This might seem like the best option, but risk is everwhere, whether it’s from hurricanes, tornadoes, earthquakes, or even volcanoes.
Transfer the Risk. Purchase a hurricane insurance plan and have an emergency plan in place. This protects you from immediate risks, such as having to evacuate, and long-term risk if a hurricane destroys your home.
It’s easy to see that option four is your best bet. Let’s look at how to transfer the risks you face while living in a hurricane-prone area.
Make An Emergency Hurricane Plan Now
It’s never too late to make an emergency plan. There are a few simple steps you can take now to ensure you’re prepared for the next major hurricane.
First, raise some liquidity including cash. If a hurricane hits your town, you’ll need access to cash now. What happens if you have to evacuate last minute but aren’t able to because you don’t have the money to get your family somewhere safe? Don’t assume you’ll be able to run to the bank; they’ll evacuate as well.
Try to save enough money for two to three months of living expenses. You want to make sure you can pay your bills if you aren’t able to work after a significant storm. This is the cornerstone of any financial plan.
Second, plan. Stock up on some extra fuel, especially if you live along the coast or in Florida. The day before Irma came through Florida; there were thousands of cars clogging the main highway and gas stations began running out of fuel. Keep some non-perishable food on hand in case stores close down.
Know where you’re going and plan an evacuation route ahead of time. You don’t want to spend valuable time calling relatives to make sure you can stay with them. When hurricane Irma switched course and started going towards the western part of Florida, there was a small window of time that you could leave your home, avoid the traffic jams, and find gas relatively easy.
That window of time was one hour. If you left after that, it doubled or tripled your travel time…if you didn’t run out of gas. Don’t take minutes for granted.
Buy some boards to keep handy in case you need to secure your home for an evacuation. Hurricane shutters are more expensive but more effective as well. Put important documents in an evacuation box. Don’t leave your house without your social security card and birth certificate.
Don’t assume that utilities will work, either. You’ll need water and a backup generator. The generator is of particular importance if you or a loved one relies on electricity for health reasons. Emergency services will do their best to help, but after a disaster might not be able to reach you. Have a battery-powered radio for updates as well as enough batteries to last for two weeks.
In the last section, we discussed having liquidity. This topic, and financial matters, in general, deserve extra attention. It’s often difficult to get people to take this aspect of planning seriously. As a financial Planning firm that serves the Emerald coast I’ve seen the good and the bad when it comes to hurricane season.
Imagine that you find out a hurricane is coming. You watch the news, and the governor tells citizens to stay inside and off the highway because it’s too late to flee. You might think this wouldn’t happen, but it did with Irma due to the late change in course. It also happened in SC a few years ago, only the warning came too late, and there were people on I-26 in traffic as the hurricane hit the state.
You hunker down when the storm hits, and luckily your house is intact, and everyone is safe. You feel good because you’ve got plenty in your bank account. What could go wrong? Why was everyone telling you that you need an elaborate plan in case a disaster strikes?
You realize your power is out, and your neighbor tells you that the radio stated it could be anywhere from three days to a week for it to come back on. Your water isn’t working, or worse, the storm contaminated it. He forgot to mention that the water is undrinkable…that radio would have come in handy.
You go to the store to get some medicine, but it’s closed. You find a few gas stations that are open, but with the power out, the credit card machines are down. They are unsure when they’ll be back up, leaving you sick with no medicine, no money, and no gas to get somewhere that can help you.
Your cell phone works, but you aren’t able to reach the emergency responders. Apparently, there were a lot of people like you that assumed this situation only happened on the news. You get lucky when your neighbor has medicine and some extra food because he planned ahead.
There are two ways to avoid this situation: a hurricane plan and liquidity. Cash solves most problems after a hurricane. Never assume that the money in your bank is worth anything after an emergency. Your stocks aren’t going to help you either. You can’t liquidate them after the fact, and in the immediate aftermath of almost every disaster, stock prices go down, meaning you’ll have less money than you think for a short time.
There are some wealthy people every year that end up relying on the kindness of strangers. Money without a plan is worthless, and a plan without money is ineffective. You need a balance of both to stay ahead of the game.
Homeowners that live in hurricane-prone areas know how much damage a storm can do to their property. The problem is that typical homeowners insurance doesn’t cover all the possible damage a hurricane causes.
After developing a hurricane plan to protect your life, your next step is to develop a plan that will keep your property safe.
First, go over your current insurance and see what type of coverage you have. Most plans cover wind damage but not flooding. Some insurance policies don’t cover wind damage though. Along the coast in areas that see high hurricane activity, many insurance companies shy away from this coverage. Flood insurance is a separate policy that you’ll need to purchase, as a majority of damage comes from the massive rain hurricanes bring.
There are some essential technicalities to remember when going over your insurance plans. For example, if the wind from a hurricane takes out part of your wall and that leads to flooding, most policies will cover the damage. Regular flooding due to a rise in water levels is not insured. Contact your insurance company for clarification if need be.
Deductibles are another area to examine. After the massive financial losses insurance companies have had to absorb because of recent hurricane value, many companies now require a separate wind damage deductible instead of a fixed one. It’s normal for this deductible to run between 1-5% of your home’s value.
Hurricanes aren’t the most pleasant thing to discuss, but it’s essential to have this information up front. You can’t control the storm itself, but you can control your reaction to it. Remember the ideal form of risk management? Transfer the risk by preparing ahead and having the right insurance to meet your needs.
If you need help developing a hurricane plan and finding the best insurance for your situation, contact us today. We’ll help you discover ways to plan ahead for emergencies and give you the peace of mind you need to enjoy coastal living. Don’t put your life or financial health in jeopardy when help is just a phone call away.