Are You Prepared Financially For The Next Storm?

The 2020 Atlantic Hurricane season is here and the question on everyone’s mind, especially those living along the east coast – is whether this year’s hurricane total will approach the past few years of record-setting seasons.

The 2020 Hurricane Forecast

The NOAA’s Climate Prediction Center, a division of the National Weather Service, is predicting a 60% chance of an above-normal season, a 30% chance of a near-normal season and only a 10% chance of a below-normal season.

Having an Emergency Plan is Critical

How prepared are you to financially to weather a catastrophe? We often suggest to our clients that they maintain some liquidity with their assets because sometimes you need cash quickly. Tying up all of your capital in an illiquid asset, like a house or business can leave you and your family potentially stranded in times of distress.

As a result of the recent tropical storm that caused damage on the east coast, some people are finding out the hard way that their homeowners insurance does not cover flooding and that owning a flood insurance policy may have been helpful.

Think About the Little Things

A good rule of thumb is to have three to six months of household expenses saved in a bank account. Since bank ATMs may not be working after a disaster, having one to two weeks of cash on hand is a good idea. Risk management is far more than just buying an insurance policy. Risk management is understanding the risks you incur and properly preparing for them, regardless of how remote they first appear.

Risk Management 101

Remember, you can’t insure for everything. However, you can better understand the risks you are exposed to and in simple terms, you can then take one of four courses of action.

1. Retain the risk and hope for the best.
2. Reduce the risk by creating and testing your emergency plan.
3. Avoid the risk by not living/working where hurricanes are likely to form.
4. Transfer the risk by purchasing an insurance policy, if available.

The key is truly understanding what risks exist in your life and covering the highest probability exposure, as well as the least likely but most devastating possibilities. Remember, it’s ok to retain some risks, because you simply can’t eliminate all of it. With a few steps, you can dramatically reduce your risk profile.

We encourage you to contact our office at contactus@covenantwealthstrategies.com or 302.234.5655 to learn more about ways to be prepared and strategies for protecting you and your loved ones from a financial catastrophe.