The arrival of Memorial Day weekend means just a few days after the Atlantic hurricane season. This officially lasts for 6 months.
For many years, coastal residents have come to take this as an annual event. Except for evacuation plans and stockpiles, such as spring cleaning and holiday shopping.
But even long-time residents of hurricane-prone areas may find it difficult to understand the multiple types of insurance that can protect most people from the catastrophic loss to their home, which is their greatest asset. Maybe.
This can be even more difficult for countless newcomers who have moved to the South Carolina coast from places where hurricanes weren’t particularly threatening.
For example, if you have never been reported on a hurricane (“Wind and Hail”), these deductible mechanisms can be a big surprise.
The coverage of hurricane damage is usually 1% to 10% deduction, unlike basic home insurance. Some might assume that the insured pays that percentage of the claim, but that can lead to costly errors.
It’s a simple assumption because it’s how health insurance policies usually work. If you have a 10% medical deduction, you pay 10% of your invoice, right?
However, a 10% hurricane deduction means that the customer pays 10% of the value of the insured’s assets before the carrier pays anything. Therefore, anyone who owns a home with $ 300,000 insured will have $ 30,000 insured.
Wow.
Of course, the higher the deduction amount, the lower the insurance premium. This is to reduce the risk of the insurance company, but people need to understand what they are signing up for. A 10% deduction can be big, but even a 2% deduction means $ 6,000 for someone who insures a $ 300,000 home.
It is also important to understand what the policy covers. For example, what we think of as hurricane insurance does not cover flooding, which is one of the major risks of hurricanes. For that, another insurance is required.
The lessee’s insurance is easy for the lessee as it covers the property, not the internal buildings.
It’s a good idea to review your insurance policy annually, as your needs can change and you may be able to find better deals. Ensuring that you have the right coverage and manageable deductions is part of that process.
So how can homeowners plan to pay thousands or tens of thousands of dollars for deductions if the “Big One” strikes?
Emergency funding is the answer, and it really is something everyone should have. Emergency funds are ideally months of living expenses and are reserved in the event of a disaster or unexpectedly large amount of expenses.
I’ve written about Catastrophe Savings Accounts, a tax-friendly way to save money in South Carolina, but it’s hard to find a bank to offer them, and money has little interest in savings accounts. It’s in your account.
The best idea I know about emergency savings this year is the Federal Government I-bond (only available online at treasurydirect.gov). These secure savings bonds are currently paying interest of 9.62%. Interest rates are reset every 6 months based on inflation.
These are intended for long-term savings, but can be redeemed in just one year at the expense of losing interest in the last three months. This is far better than earning little interest, perhaps for years after receiving a single South Carolina income tax deduction.
arrival David Slade At 843-937-5552. Follow him on Twitter @DSladeNews.
