5 Ways To Disaster Proof Your Finances

3. Update your homeowners insurance.

It may seem obvious to you and me, but believe it or not, most people are either not insured at all or severely under-insured on their homeowners insurance. According to the Federal Emergency Management Agency, only 25 percent of the 10 million American homes that lie within high flood-risk zones carry flood insurance, despite the fact that homes are four times more likely to be damaged by flood than by fire.

4. Be sure you have the right kind of insurance coverage.

Your first line of defense is your homeowners insurance so make sure you’ve examined your insurance coverage before disaster strikes. What you don’t know CAN hurt you in the long run. For example, there’s a big difference between replacement and reimbursement cost. If your 3-year-old flat screen television is destroyed in a flood, does your coverage pay to replace it or only pay you based on it’s current, depreciated value (much less)? Some policies only cover the structure so make certain you cover the contents of your home, as well as the structure. If you’re a renter, buy renter’s insurance because the landlord’s insurance won’t cover damage to your possessions.

5. Beef up your emergency fund.

If you find yourself going through a disaster, having a three to six month emergency fund will be a lifesaver. Don’t delay in starting your fund as soon as possible. Use my Sneaky Savings Strategies to help you pump cash into your fund and don’t be afraid to get creative in your own savings ideas.

We all hope we never have to weather such a storm, but by taking a few smart precautions, a punch in the face by Mother Nature won’t knock you out.

Note: This article was included in the Carnival of Personal Finance – Blogthority.com Relaunch Edition! Make More Money Blogging edition! Thanks Mike!

Photo by smiteme