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2/26/2019

Don't Let a Disaster Ruin Your Finances

Be ready with emergency savings

In times of trouble, one of the first questions that comes to mind is, “How will I pay for this?”

When hurricanes, tornados, floods and other major natural disasters strike, people look to the federal government for financial relief. But not every disaster qualifies for funding.

With high winds and fierce storms often come fallen trees, house fires and flooding. Damage to your home can be severe and costly to repair. Be financially prepared for the worst with a natural disaster emergency fund.

Insurance doesn't cover everything

You probably know that your homeowners insurance deductible is your out-of-pocket cost before your insurance kicks in. But you may still have questions about the details. Like:

  • How do I reach my deductible? Homeowner’s insurance deductibles can be either a dollar amount, a percentage of the coverage for your home or a combination of both.
  • What isn’t covered? Standard homeowner’s policies don't cover earthquakes or floods. Separate policies can be purchased to cover those events. In areas more prone to these types of disasters, the deductibles and premiums may be higher than your typical homeowner’s insurance costs.
  • When does it apply? Unlike your annual health insurance deductible, homeowner’s insurance deductibles apply to each and every claim you make during a year. So, if you live in an area of high impact, you could end up reaching into your own pocket multiple times throughout the year to pay the deductible
  • What happens before I get paid? You may need to pay some expenses up front or out of pocket before you receive your insurance payment.

Three questions to ask yourself

Set up an emergency savings account and decide how much you need to save to avoid a financial emergency when the worst happens. Start by asking yourself if you have:

  1. Easy access to enough cash to cover lodging, food and transportation for several days
  2. A home inventory with a realistic picture of what it would cost to replace your belongings
  3. Enough set aside to pay for what insurance might not cover

Consider growing your dollars faster by building up a natural disaster emergency fund with a high-yield savings account like Savings Builder at an online-only bank. Online-only banks typically offer interest rates higher than your everyday bank with daily compounding and few, if any, fees.

Don’t avoid the inevitable. Start saving now to be financially prepared in the event of a hurricane, tornado, earthquake or severe storm. Make an emergency fund a key part of your disaster-focused emergency plan.

Disaster-proofing beyond your savings

Along with creating an emergency savings fund, take time to organize your financial and personal documents. Keep them in a safe place like a water- or fire-proof box that you can get to easily. Make a backup of the information and store it in a password-protected online location or with someone you trust.

If you rent, renter's insurance can offer peace of mind when disaster is on the horizon. It can cover your personal belongings, liability, and additional living expenses while the costs of repairing your building falls to your landlord.

Don't let a natural disaster wreak havoc with your finances. We’re here to help you prepare. Discover information about our accounts and current interest rates at the CIT Bank homepage here.

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