The most effective way to protect your home and belongings is to safeguard them before a disaster strikes. These measures — called “mitigation” — may help you avoid damage altogether or, at the very least, reduce the damage and economic impact of a disaster. These steps apply whether you are a homeowner or if you are a renter.
Step 1: Know what you own.
Before you can protect what you own, you need to have an accurate record of your assets and possessions — you cannot adequately protect what you don’t know that you have. Your furniture, electronics, appliances, tools and keepsakes are just as important to protect as your house and vehicles.
To do this, conduct a household inventory. Make a list of your possessions and include model and serial numbers when available and store your list in a safe place as well as in the cloud. You may also want to photograph your home and its contents to better document should you need to make an insurance claim.
Step 2: Maintain appropriate property insurance.
Some disasters will damage property regardless of how prepared you are. That is why homeowners and renters’ insurance are so important. The single most impactful action you can take to mitigate potential disaster is to have adequate insurance coverage.
When buying homeowners or renters insurance, it's important to know what's covered and not covered. For example, you want to make sure a homeowners policy is for full replacement coverage, if available.
You also want to make sure you're insuring for the replacement cost of your possessions. Standard coverage only pays for the actual cash value (replacement cost discounted for age or use). Typical policies cover personal property at 50 percent of dwelling coverage, so you may need to purchase more coverage to be fully protected for all your stuff.
A NOTE ON RENTERS’ INSURANCE
If you are renting an apartment or home, it is important to note that your landlord’s insurance will not cover damage to your possessions in the event of a disaster. Renters’ insurance often is inexpensive, but can have a large impact because it pays for your damaged, destroyed or stolen personal property. In addition, it provides liability coverage for you and generally covers damage to the interior surfaces of your rental property.
Comparison shop for the best coverage at the best price. Start with the company that insures your car because discounts may be available if you carry more than one policy with the same company. Make sure you understand the deductible and what the policy does and does not cover.
Step 3: Safeguarding your home.
When it comes to preparing for a potential disaster, it is important to start with the basics such as installing smoke alarms and carbon monoxide detectors, and knowing where to shut off utilities.
Next, learn what types of disasters could affect your area and assess the vulnerability of your home. If you’re unsure of your vulnerabilities, here are some good places to start. You may even ask these professionals if they can inspect your home or apartment to provide specific advice on how to improve its safety.
- Your local American Red Cross chapter, redcross.org
- The Federal Emergency Management Agency (FEMA), fema.gov
- The U.S. Department of Homeland Security, ready.gov
- Your local emergency management offices
- Fire and police departments
- Zoning and building-permit offices
- Home inspectors, structural engineers and architects
Step 4: Hiring contractors.
For mitigation projects beyond the scope of your schedule or skill level, you may need to hire help. Use this checklist to help find a reputable contractor.
- Get estimates from several licensed, bonded, reputable contractors.
- Check at least three references to see if the contractor did a good job and charged a fair price.
- Call your local Better Business Bureau or state contractors’ board to check out contractors you are considering and find out if complaints have been filed against them.
- The state contractors’ board will confirm that the contractor’s license is current and what the license limit is. If the contractor is bidding on a $50,000 job but has a $10,000 limit, move on.
- Ask for proof of necessary licenses and building permits.
- Write down the license plate number and driver’s license number of any person offering services in case you must report a problem later.
- Call the insuring and licensing company to verify that the policy currently is in force and that the appropriate license is current.
- Remember that receiving a copy of the insurance certificate is not proof positive that it is legitimate.
- Verify that your signature on a bid is not an authorization to start work.
- Ensure that no work begins until you are ready to move forward.
- Get contracts in writing.
- Contracts should cover the scope of work, materials, costs and payment schedules.
- Make sure the contract includes recourse for incomplete or unacceptable work.
- Be wary of offers that are “too good to be true.” Don’t give in to contractors claiming cheap work without the red tape.
- Make periodic payments. For example, pay 20 percent down to start work, and make additional payments as work progresses. If a contractor insists on a materials payment up front, go with him or her to buy the materials or pay the supplier directly.
- Demand quality. Make sure projects are done according to local building codes and regulations. Verify that work is done according to the building permit and that a final inspection is performed by the permitting authority.
- Don’t make a final payment until the job is finished to your satisfaction. In addition, be sure that all work requiring city or county inspection officially is approved in writing before settling with the contractor. You even may want a structural engineer to double check major projects before you make the final payment.
- Get a release of lien. Have the contractor and all subcontractors sign a release of lien when the work is finished and paid for, protecting you from any later claims for unpaid materials and labor.
- Don’t sign over an insurance settlement to a contractor. Make payments over time, as the work is completed and verified by an inspector.
For more information, check out our full guide, Disasters and Financial Planning: A Guide for Preparedness and Recovery, created in collaboration with the American Red Cross as a public service by the National Endowment for Financial Education (NEFE).