The most effective way to protect your home and belongings is to take steps to safeguard them before a disaster strikes. Referred to as “mitigation,” these measures may help you avoid damage altogether in some situations, or at the very least, reduce the damage and economic impact a disaster may bring.

This section looks at financial considerations related to protecting your property against disaster — whether you are a homeowner or renter.

Steps to Take
To get started, first find out any potential problems with your living space and then make a plan to address them.

What should I do to protect my home and belongings from disaster?
Take care of the basics first, 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 the vulnerability of your home or apartment. Sources of information include your local chapter of the American Red Cross (www.redcross.org), the Federal Emergency Management Agency (FEMA, www.fema.gov), the U.S. Department of Homeland Security (www.ready.gov), local emergency management offices, fire and police departments, zoning and building-permit offices, home inspectors, hardware dealers, structural engineers, and architects. Ask these professionals if they can inspect your home or apartment and provide specific advice on how to improve its safety.

What are some examples of mitigation?
A few measures you might take, depending on where you live, include:

• In areas where earthquakes can cause damage, use child-resistant latches to keep cabinet doors shut. Bolt bookcases and tall furniture to wall studs. Secure overhead light fixtures to beams or rafters. Use straps to secure your water heater. Have a professional anchor the main frame of the home to
  its foundation.
• If you live in an area prone to wildfires, clear brush surrounding your home, make sure you have fire resistant siding, and consider replacing wood-shingled roofs with less flammable materials.
• In an area that experiences high winds, hurricanes, or tornadoes, consider measures such as having a professional anchor your home to the foundation, strapping the roof to the main frame, installing hurricane shutters, and building a tornado safe room or shelter in your home. These will help protect your family against high winds from hurricanes and tornadoes.
• To protect against flooding, move electrical panel boxes and the furnace from the basement or crawl space to an upper floor or attic. You might also elevate the home or relocate it.
• Know how to shut off all your utilities (gas lines, water, electricity).
• Before you buy a home, consider the location. For example, avoid buying a home in an area where the soil may not be able to support it during an earthquake or in a flood plain. Also, evaluate the home’s construction. For example, housing developments in some tornado-prone areas may include a safe room as part of the basic home. Hire a building inspector or structural engineer to inspect the house for safety, structural integrity, and differences or variations from current building codes before closing the sale. Local customs dictate who will pay for the inspection (the buyer or the seller), but some states require the seller to pay for some mitigation costs such as functioning smoke alarms.

RETURN TO TOP

Paying for a Mitigation Project
Some measures that may prevent or reduce further disaster damage, called mitigation measures, cost very little, such as moving items that can break from high shelves to low ones, or installing latches to keep cabinet doors shut. Some mitigation measures can be quite costly, such as having a tornado safe room built, or having a professional anchor your home to its foundation.

These actions can help save lives and property from the effects of a disaster. Ask your local Red Cross or the local emergency management agency what actions you should consider to protect your home and loved ones. While neither the Red Cross nor emergency management can inspect your home and make specific mitigation recommendations, they can provide information that can help you decide what needs to be done.

Consider the following sources to help pay for a mitigation project:

• Savings. Depending on the urgency of the project, this might be a legitimate reason for tapping into your emergency fund or other savings.
• Loans. You may be able to borrow against the equity in your home using a second mortgage or home equity line of credit. Or, you may be able to borrow money from your 401(k) or 403(b) plan at work.
  Likewise, you may be able to borrow against the cash value of a whole-life or universal life insurance policy. All of these options have tax and financial implications, which you should discuss with your CPA, financial planner, or other financial adviser before making a decision.
• Government programs. Find out if your city or state has any special programs to help pay for a mitigation project. For example, your state might have a rebate program to cover part of the cost of building a tornado shelter (also called a safe room) in your house. The funds for such a rebate program may be available from your state emergency management agency. If federal funds for mitigation are available, they will be provided to your state emergency management agency, which then makes them available by application to homeowners. Good sources of information about paying for mitigation projects include the Federal Emergency Management Agency (www.fema.gov) and the U.S. Small Business Administration (www.sba.gov) also have special loan and mortgage-insurance programs to help homeowners pay for mitigation projects, such as a safe room.

RETURN TO TOP

For More Information Mitigation Resources for Success, a FEMA publication, contains more than 30 fact sheets on specific projects you can undertake to protect your home or business from a disaster. Projects range from adding a waterproof veneer to exterior walls to using flexible connectors on gas and water lines. Some of these measures, such as putting latches on drawers and cabinet doors, cost only a few dollars, while others, such as replacing roofing with fire-resistant shingles, could cost several thousand dollars. Each fact sheet provides estimated costs, illustrations, and purchasing and installation tips. To obtain the fact sheets, visit www.fema.gov, and then click Preparation & Prevention under the Library heading at left.

Hiring Contractors
For those jobs beyond the scope of your schedule or skill level, you will need to hire a contractor.

How can I find a reputable contractor?
If your mitigation project needs a professional, the following suggestions can help you successfully hire and manage a contractor:

• Screen contractors. Get estimates from several licensed, bonded, reputable contractors. If your neighbors have done similar work, find out whom they used and what they paid. 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 to check out each contractor you are considering and find out if complaints have been filed. Verify each contractor’s license with the building department.
• Ask to see proof of necessary licenses, building permits, and a certificate of insurance covering liability and workers’ compensation. Also, contractors should provide proof that they are bonded. Write down the license plate number and driver’s license number of someone offering services in case you have to report a problem later.
• Make sure your signature on a bid is not an authorization to start work.
• Get contracts in writing. Contracts should cover the scope of work, materials, costs, and payment schedules.
• 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.
• Expect Quality. Make sure projects are done according to local building codes and regulations. You can verify this by making sure a building permit is issued and a final inspection is performed by the permitting authority.
• Don’t make a final payment until the job is finished and you are satisfied with it. In addition, be sure that all work requiring city or county inspection is officially approved in writing before settling with the contractor. You may even want a structural engineer to double-check major projects before you make a 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.

RETURN TO TOP

Buying Insurance

Even when you take steps to prepare for the possibility of a disaster, you still could experience unavoidable property damage. That’s why renters’ and homeowners’ insurance is so important — yet many people affected by a disaster are underinsured or not insured at all.
Answers to questions you may have about homeowners’ and renters’ insurance follow.

What should I look for in a homeowners’ policy?
A few suggestions for what to look for in a homeowners’ policy are outlined below:

• Buy, at a minimum, full replacement or replacement cost coverage. This means the insurance company will pay to replace your house up to the limits specified in the policy. In some states, full replacement cost insurance is not available. Check with an insurance broker or agent to determine the maximum available insurance coverage.
• Investigate buying a guaranteed replacement cost policy. When available, these policies can pay to rebuild your house, including improvements, at today’s prices (but usually limited to 15 percent more than the amount of the policy coverage).
• Have your home periodically appraised to be sure the policy reflects its current replacement costs, and update the policy to include any home improvements.
• Buy a policy that covers 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.
• Make sure you understand what the policy will and will not cover, and what the deductible is (the amount you pay before the policy pays).
  Check state or federally operated insurance pools if you find it difficult to obtain private coverage because of a recent disaster. Premiums often run higher than market rates, but this is better than no coverage.
• Talk with your insurance agent about other considerations related to your insurance. For example, ask if the company will cancel your coverage if you are ever late with a payment or if you file several claims in a short period of time. Find out if making a claim could jeopardize a new buyer’s ability to obtain insurance on the house if you decide to sell it. Also, ask the agent if the insurance company keeps records of your conversations about these issues, and if that could negatively affect the insurability of your home.
• After a disaster, almost all insurance companies place a 30-day moratorium on new coverage. Consider delaying the closing of a house purchase if that happens.

What should I know about renters’ insurance?
Renters’ insurance pays for damaged, destroyed, or stolen personal property. This insurance is not very expensive, but it is important to have because your landlord’s insurance will not cover damage to or loss of your possessions. It also provides liability coverage for you, and it generally covers damage to the interior surfaces of units you rent.

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. For example, will the policy pay for living expenses if you have to temporarily move somewhere else?

Do I need other insurance coverage?
Depending on where you live and your individual circumstances, you may want to consider the following types of insurance:

• Earthquake insurance. Premiums and deductibles for earthquake coverage are high, but it may be better than no coverage at all. Generally, coverage for your possessions is available as well as for the home itself. Ask your agent what your policy does — and does not — cover.
• Flood insurance. If you are unable to buy additional flood protection insurance from your insurance company, call the National Flood Insurance Program at 1-800-427-2419 for an agent who writes flood insurance in your area. In addition, www.floodsmart.gov is a Web site that provides information on how to obtain a flood insurance policy. Also, if you buy a home in an area that has a special flood hazard area in any given year (also known as a 100-year floodplain), the lender may require you to purchase flood insurance as a condition of receiving a mortgage.
• Riders. Ask your insurance agent if you need a policy or a rider to cover computer equipment, home office property, jewelry, artwork, or other expensive items. If you have equipment that you regularly use at home for work, normally it is not covered by your homeowners’ policy. Review additional coverage with your agent.
• Umbrella liability insurance. Liability insurance protects you against financial loss if someone is injured on your property and sues you. Homeowners’ policies provide limited personal liability coverage. If you think you need more coverage, increase the coverage in your existing policy and consider purchasing an umbrella or excess liability policy.
  available.

RETURN TO TOP

10 Facts Everyone Should Know About Flood Insurance The Federal Emergency Management Agency, Mitigation Division, provides the following list of facts about flood insurance. Adapted from information provided at www.fema.gov/nfip/c_10.shtm Everyone lives in a potential flood zone, but the risk ranges from very high to virtually nonexistent. Storms, melting snow, dam failures, and overloaded drainage systems all can cause flooding. Flood damage is not covered by homeowners’ policies. This includes damage from water that enters the home from outside, generally called ground water. (If, however, another factor such as wind is involved, the damage may be covered. For example, if wind rips the roof off a home during a flood, any water damage may be covered.) You can buy flood insurance no matter what your flood risk is, but only if you live in a "participating community," which is defined as one that has adopted and enforces flood plan management ordinances. Almost 25 percent of all flood insurance claims come from low- to moderate-risk areas. Another fact: If you are in a high-risk area, your home is five times more likely to be damaged by flood than by fire. Flood insurance is affordable—about $400 a year for $100,000 of coverage. Compare that to a disaster home loan that could cost more than $300 a month for $50,000 over 20 years. A policy for homes in low- to moderate-risk areas costs just over $100 per year. For more detailed information, visit www.fema.gov/nfip/prpbroch.shtm Flood insurance is usually easy to get—provided that you live in a participating community. Call your insurance agent. If your agent cannot provide it, visit the FEMA Web site (www.fema.gov) and search for an agent who participates in the Write Your Own program. Contents’ coverage is separate, so renters can insure their belongings, too. Up to a total of $1 million of flood insurance coverage is available for non-residential buildings. This means that $500,000 is set aside for the non-residential building and $500,000 for its contents. For residential buildings, the limit is $250,000. You can, however, obtain separate policies for separate structures. There is usually a 30-day waiting period before the coverage goes into effect. Federal disaster assistance is often not the answer. This assistance is only available if the president declares a disaster (based on its extent). Although more than 90 percent of all disasters in the United States are not presidentially declared, state and local resources may be available.