Living along the Southeast coast requires coming to terms with a hurricane season that lasts from the beginning of June through November, every year, which can be a threat to personal finances even if a big storm doesn't strike.
Preparedness rightly focuses on threats to life and property, but what about the financial costs of being ordered to evacuate — that's happened three times in the past four years in Charleston — and the losses of income regularly suffered by many workers in storm-threatened areas?
I've been visiting family in Charleston, Summerville, Edgefield and other parts of South Carolina since the year I was born, more than 50 years ago, but did not fully appreciate the annual anxiety of hurricane season until I moved to the Palmetto State 15 years ago. My family moved to a house in the Charleston area 20 days before the arrival of Hurricane Gaston, a Category 1 storm that was relatively weak but still a wake-up call.
One thing that's become clear in the years since is that it's great to be prepared with food, water, medicine and adequate insurance, but storms can also be financially devastating, and even the threat of a big storm can be a hardship.
For example, someone can have a house with a good insurance policy, but still end up with a five-figure bill for an upfront deductible if there's hurricane damage. That's a lot of money.
And many coastal residents have unexpectedly lost up to a week's pay because of mandatory evacuation orders and business closings. Some companies pay their workers during storm-related closures, but most do not, and workers in the hospitality industry who rely on tips to make ends meet are often hard-hit.
For many people, Hurricane Dorian was just the latest real-time test of how prepared we really are. If you're anything like me, you probably realized in the past week that there were things you could have or should have done earlier.
Maybe you weren't prepared at all and got lucky this time. Maybe you were well prepared, but faced expenses due to evacuating, or lost wages. And maybe you told yourself you would be less stressed and better prepared, next time.
Here are some tips I assembled for a column that was published after Hurricane Irma. I hope they can help prepare for storms that will follow Dorian — because we all know there will be a next one:
- Crucially, have an emergency fund. That's money you have saved and will only spend if you must, due to something unexpected. It can be hard to save money, but everyone should have an emergency fund.
Fall-back plans for emergency-related spending could include a Roth IRA, because contributed money can be withdrawn without penalty, or a 401k loan, or a home equity line of credit. It's not ideal to spend or borrow retirement savings or home equity, but a homeowner could potentially face a $10,000 or $20,000 deductible for hurricane damage, and needs to have a plan to access that kind of money.
- Review and maintain insurance. When a big storm is bearing down, that’s not the time to wonder about coverage. Make sure your home, or your possessions in a rented home, are adequately insured before the start of hurricane season on June 1.
If you own a home, know and understand your hurricane deductible. A 5 percent hurricane deductible means you’re responsible for 5 percent of the insured value of the home — not 5 percent of the repair bill — before the insurance pays out a dime. And if you rent, you should have renters' insurance. It's relatively inexpensive, and insures your possessions.
- Assemble important documents and keep them safe. Insurance policies, legal papers, photos of your home and an inventory of possessions, passports and other hard-to-replace hard copies should be in a safe deposit box. Alternatively, take them with you if you evacuate.
- Have some cash on hand, ideally in small bills. If a hurricane strikes, don’t count on bank machines to work, and credit or debit cards could be of limited use if the power is out.
- Back up computer files regularly. Use a cloud-based storage system or an external hard drive that can go with you in an evacuation.
Taking care of these things ahead of time can make the inevitable scramble to prepare for a hurricane threat a little less stressful. As it does every year, the season ends Nov. 30.