7 Best Ways Homeowners Can Protect Their Finances in Extreme Weather
Written by
Heather Altamirano
Edited by
Chris Cluff
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We’re only in the beginning of 2025, and many parts of the country are experiencing freezing temperatures while Los Angeles is dealing with unprecedented fires that have caused more than $250 billion in damage, according to a report from AccuWeather.
Planning financially for naturally occurring disasters isn’t easy, especially when they become prevalent. Extreme weather events have become an alarming nationwide issue. The National Centers for Environmental Information (NCEI) noted there have been 27 climate disasters with losses of more than $1 billion each.
With weather frequently wreaking havoc across the country, it makes all the more sense to focus more energy on protecting your home and finances.
How Much To Spend on a House
Thousands of people have lost their houses and all of their possessions as a result of the wildfires tearing through L.A., leaving people wondering how much of their worth should really be tied up in their homes.
“The standard rule of thumb is that your monthly liability expenses should not exceed 36% of your gross income,” said Eric Mangold, founder of Argosy Wealth Management. “You divide your mortgage, taxes, insurance and other debt payments by your gross income. If it is more than 36%, you may feel a bite in your lifestyle.”
Have an Emergency Fund
In unexpected situations, having a financial buffer can help people avoid hitting rock bottom. According to Mangold, people should have three to six months of expenses saved.
“When I think about the tragedy of facing a natural disaster, I think emergency funds and how foundational they are to financial plans,” he said. “The emergency fund, rainy day fund or slush fund are all the same, in that they are liquid investments that carry very little to no risk and can be accessible in times of dire need. Not only for natural disasters but in times of job loss or perhaps a medical need, the emergency fund can come in handy.”
Take Note of Your Valuables
Losing everything in a fire or flood is devastating. To rebuild quicker, Zachary Schneiderman, president of Schneiderman Insurance Agency, recommends taking note of your belongings to help claims go smoothly. With the exceedingly high volume of claims submitted at once, there can be delays. Being prepared can help move things along.
“We understand that most clients don’t have receipts for everything they own,” Schneiderman said, “so we advise our clients to log serial numbers for high-value items such as handbags, computers and cameras as well as to taking photos of each room of their home.
“Once you have the photos along with a spreadsheet complete with serial numbers, store those files in the cloud so they are accessible later.”
Have Your Items Appraised
Another way to ensure a seamless claim process is to have your valuable jewelry, fine art, and other collectibles appraised.
“Once we have those appraisals,” Schneiderman said, “we can insure those items by endorsing their homeowners’ insurance or scheduling them on a floater which is also known as an inland marine policy.”
Make a Spreadsheet
If a total loss occurs, Schneiderman advised creating a spreadsheet and documenting lost, damaged, or destroyed belongings.
“You might not remember everything all in one sitting, so consider it a work in progress and keep adding to it over time, ” he said. “As you re-purchase items, keep receipts, as your adjuster will need those as proof of replacement to help you get reimbursement later.”
Go the Extra Mile
Getting insurance in California can be tough, especially if you’re in a high-risk area.
“In California, we urge clients to have their home certified by wildfireprepared.org,” Schneiderman said.
He also suggested that people get home leak detection and automatic shutoff devices such as Flo by Moen.
He added, “To get certified is a process, but doing so is evidence you’ve taken additional precautions to reduce the exposures surrounding your home.”
Turn Off the AC
In the event of an evacuation, turn off your AC unit if there’s time to protect your home from the smell and damage of the surrounding smoke. Schneiderman explained, “If the HVAC is running while there is smoke in the vicinity, your system may be bringing that smoke into the home.”
Review Your Policy
Don’t wait until an emergency to find out whether your policy covers you.
“We’re going to hear about all the people that didn’t have renters insurance and how devastated they are,” Schneiderman said. “Just because a landlord does not require renters insurance does not mean you don’t need it.”
Schneiderman recommends reviewing your policy with an agent and not rushing through the process.
Recovering from a weather disaster requires navigating the challenging landscape of insurance, but taking simple yet vital steps to prepare for the worst can play a pivotal role in rebuilding.
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