SLADE COLUMN: Tips for hurricane season savings
Hurricane season began Friday and lasts until the end of November. It's South Carolina's second-longest season, right after “hot.”
Most residents know the routine.
It's time to stock up on bottled water, medicine and at least several days worth of nonperishable food (and time to eat whatever's left from last year — that stuff doesn't last forever).
Time to check your evacuation plans, your emergency contacts and run through that mental checklist of what would have to get done if you had to leave home in a hurry.
The hurricane basics call for being prepared, hoping for the best and leaving when they tell you to go, if not sooner.
You can't change the weather, but there are some things you can do to make sure the financial burden of hurricane season is no heavier than it has to be.
If you haven't reviewed your insurance in the past year, and checked to see that you're getting the best deal, June 1 is a good reminder to shop your policy around.
Here are some money-related hurricane season tips:
Credit for insurance
Hurricane insurance is costly on the coast, and flood insurance can be expensive, too.
For South Carolina residents who are paying big premiums relative to their incomes, the state offers a generous income tax credit. I know people who saved thousands of dollars by claiming this credit for current and prior year tax returns after reading about it in a previous column.
The way the Excess Insurance Premium Credit works is if your property insurance costs equal more than 5 percent of your federal adjusted gross income, South Carolina will give you a dollar-for-dollar tax credit for the difference, up to $1,250 yearly. The credit is claimed on state income tax returns, on Schedule TC-44. Visit sctax.org for more information.
Tax help for disaster
South Carolina's little-known Catastrophe Savings Account program is a tax incentive aimed at encouraging people to set money aside for disaster-related insurance deductibles and uninsured risks.
There are some restrictions and fine print (visit doi.sc.gov for details), but in most cases homeowners can establish a separate bank account identified as a Catastrophe Savings Account, and deduct the amount placed in that account from their South Carolina taxable income, generally up to $15,000.
At the state's top tax rate of 7 percent, that's a deduction worth up to $1,050. The funds can be withdrawn for costs associated with a declared emergency. Otherwise, withdrawn money is subject to a relatively small 2.5 percent penalty and must be declared as state income to repay the prior tax deduction.
People can withdraw the money with no penalty, and don't have to repay the tax savings, when they hit age 70, so these accounts are a financial slam-dunk for homeowners in their late 60s.
It can be difficult to find banks and credit unions that are aware of the program, but any stand-alone savings account that can be designated or nicknamed as catastrophe savings should qualify.
If you establish such an account, and later on no longer own a home, the funds can be withdrawn penalty-free, but would be taxed as state income.
With some types of insurance, such as health insurance, a 10 percent deductible means you pay 10 percent of the claim amount. With hurricane (also wind and hail) insurance, a 10 percent deductible means you'll pay 10 percent of the value of the insured property before insurance kicks in.
So, if you have a house worth $200,000, you'll pay the first $20,000 of any hurricane damage regardless of the size of the claim. If that home suffered $20,000 in hurricane damage, your 10 percent deductible would turn into 100 percent of the costs. High deductibles reduce your insurance premiums, but it's important to know the risk.
App for inventory
If a hurricane or some other catastrophe strikes your home, you'll want to have records of all the things that need to be replaced for insurance purposes.
If you have a smartphone or a computer that will handle apps, you can download the “myHOME Scr.APP.book” app, which is free.
Search for NAIC to find the application, produced by the National Association of Insurance Commissioners. Or go online to home.insureonline.org for a free inventory kit.
Know flood risks
Homeowner's insurance typically doesn't cover rising water, even when it's hurricane-related.
If you don't know what flood zone your home is in, or want to know more about flood insurance, visit floodsmart.gov.
Cash on hand
Banks and credit unions are a great place to keep your money because the funds are federally insured and you can earn some interest. But just try getting access to your money if there's a major hurricane event and power and phone lines are down, ATMs aren't working and the banks are closed.
That's why it's a good idea to keep some cash tucked away, ideally in small denominations, as part of your emergency supplies.
Reach David Slade at 937-5552 or Twitter@DSladeNews.