Extreme weather and big storms are an increasing worry for many Americans. As this year's storm season gets underway, you may want to prepare your home and business. But are you financially prepared for any contingency? Not sure? Here are a few financial steps to take in preparation for any weather event.
Check Your Insurance. You can't prevent all storm damage, no matter how well prepared you are. But you can still protect your biggest assets: your home, your business, and your health. Take the time now to assess your insurance coverage against common threats in your area — hurricanes, tornadoes, snow storms, hail, and flooding. Update coverage limits if your property has increased in value, if you've made structural changes, or if you have new assets. And make sure everyone is covered by appropriate health insurance in case of injury.
Limit Portfolio Risk. Your investment portfolio could have unexpected risks to weather events. Certain industries or companies, such as those dependent on crops or located in coastal areas, are more at risk than others. How much exposure do you have to these stocks? If you invest internationally, what weather risks could affect your holdings in other countries? Your financial planner can help assess and make adjustments to meet your risk tolerance.
Increase Liquid Holdings. Before and after a big storm, like a hurricane or blizzard, you need ready access to cash. You may have to buy supplies to board up or move your property, need to stock up on food and water, or be left with important repairs after the storm passes. Protecting your investments could depend on being able to quickly repair or replace damaged items. Depending on the value and stability of assets, increase your cash holdings for quick access — both with and without internet access.
Look for Advantages. There are some financial silver linings to serious weather events for a prudent investor. After a hurricane, for example, cleanup companies and materials suppliers could see a boom in business. If refineries have to be closed in the Gulf, other oil sources generally raise prices and profits. Property near, but not on the coast, may become more attractive. You might be able to snag a great deal on a rental or primary home in some affected areas. Can you take advantage of any of these potential profit centers?
Clearly, a wise planner should look to increase positive outcomes from storm season and minimize negative ones. If you're not sure how to adjust your finances to meet this challenge, work with a professional financial service today. The more prepared you are, the better you can weather the weather this year.
