Are you prepared to overcome the financial impact of a natural disaster?

Preparing for the unknown may seem like a daunting task now but has the potential to help you in the future. 

"I never thought it would happen to me." We often hear these words from people who suddenly find themselves the victims of a natural disaster.

From wildfires and earthquakes in the West, to hurricanes in the South, to winter storms in the Northeast, and tornadoes and floods in the Midwest, the United States is checkered with hot spots for potential weather disasters. Such catastrophes can be financially devastating. In 2018 alone, the cost of weather catastrophes in the U.S. totaled $91 billion, according to the National Centers for Environmental Information. Yet, that was only the fourth-highest total for a single year on record, topped by the costs of disasters in 2005, 2012 and 2017.

For an individual or a family, the price tag of a natural disaster can be shocking, particularly for those who have extensive property damage. Without the right protections in place, their financial situation can be turned upside down overnight.

How can you prevent that from happening to you? While you likely can't predict a disaster, the key is planning for one as if it will strike eventually. Here are steps you can take now to help rebound financially if and when a weather-related event impacts you or your family.

Manage Your Financial Records

A good starting point is to have your key financial and estate planning records in order and held in a safe place. Keeping them in a file drawer is not a secure option if your home burns down or is ravaged by a flood. A waterproof and fireproof safe may provide better protection. Another option is to keep copies of important documents in a safe deposit box at your bank.

In addition, any vital information saved on a computer should be copied on an external hard drive or "thumb" drive that can be stored safely or be accessible to you through remote cloud storage.

Keep Building Your Emergency Fund

Many people think of an emergency fund as money you need when a household emergency occurs, like a medical matter or a home repair. But it is also critical in the event of a natural disaster. If you need to evacuate your home and live in a hotel for a few days or weeks, having money on hand to cover those costs will be important. Such expenses can add up, so make sure you have at least three-to-six months' worth of income set aside in an easy-to-access account. Consider a savings account that earns interest or a money market account where you have check-writing privileges or ATM cash access. Earmark these funds outside of your day-to-day spending and long-term investments so you're not tempted to spend them on other priorities.

In extreme situations, cash may be difficult to access if power is out and ATMs aren't working, so you may want to keep some cash in a fireproof safe in your home. Having cash on hand will help tide you over during the initial days of an emergency.

Review Your Insurance Coverage

Can you rely on insurance to cover property losses in the event of a major disaster? It depends on the nature of the event that does damage to your home.

You may not realize that flooding is typically not considered covered damage under your basic homeowners policy. For example, if a hurricane created flood conditions that damaged your home, it may not be covered by home insurance. This is a major risk. The Federal Emergency Management Agency estimates that just 1 inch of water in an average house can result in about $27,000 worth of damage. You may be reimbursed for such damage only if you own a flood insurance policy.

An insurance review can be a good place to start to determine the state of your coverage. Just what are you protected against, and will the replacement cost of your home be covered? How about vehicles and other personal property? Insurance is one of the most important tools to help you overcome any losses from a natural or man-made disaster. If specialized insurance, such as flood coverage, seems appropriate, explore your options.

Preparing Makes a Difference

Any type of natural disaster can take its toll on your financial life in the short and long term. Having a financial plan that accounts for these types of events could help ease the burdens you may face when and if the time comes -- and it will give you peace of mind in the meantime.