Last Updated: January 25, 2010
The aftermath of natural disasters has left many individuals and businesses facing difficult financial recovery. Beyond the damage to property, there may be an interruption of income or loss of important financial records.
It is important to plan for the unexpected. The following tips will prepare you for almost any disaster:
Pack a 'Grab and Go' Case
According to FPA Nebraska board member Joseph R. Hearn, vice president of Teckmeyer Financial Services, LLC, and author of If Something Happens To Me, you should have what he calls a 'grab and go' case. That case should contain key items that will help you rebuild in the event of a disaster. Read Disaster Preparedness Makes Sense for Finances, Too to get an idea of what should be included in your case. The 'grab and go' case should also contain a list of prescriptions and some emergency cash. "It's also a good idea to keep some of that stuff with a friend or relative in an unaffected area just in case you're unable to get out with your case," he said.
FPA member, James A. Heisler, CFP®, CDFA, of Family Wealth Services, LLC, suggests that you document and store credit card information (account number, expiration, security code) just in case your cards are lost in a storm. As part of documenting valuables, he also recommends taking photographs or video of valuable items and the home, particularly specific rooms (bathrooms, kitchen, etc.) where you may have made a considerable investment. "It would also be helpful to store the original receipts for work that was completed so that you can provide documentation to an insurance adjuster, if necessary," he said.
Safeguard Tax Records
The Internal Revenue Service (IRS) issued a release outlining what you should do to prepare. The IRS suggests that you:
- Create a backup set of records electronically
- Update emergency plans
- Check on fiduciary bonds
The IRS noted in its release that if disaster does strike, affected taxpayers can call 866.562.5227 to speak with an IRS specialist trained to handle disaster-related issues. Learn more tips from the IRS on how to prepare for a disaster.
Review Your Insurance Policies and Estate Planning Documents
Now is a good time to review and update your beneficiary designations on all accounts and insurance policies. It's also a good idea to make sure you have all your estate planning documents in order — wills, power of attorney and living will.
The National Association of Insurance Commissioners (NAIC) notes that hurricane season is a good time to make sure your insurance needs are in order, especially your homeowner's or renter's policies. According to the NAIC, now is a good time to:
- Review and update your property and casualty insurance policies with your financial planner, insurance agent and/or insurance company. For instance, check whether your policy includes coverage for replacement cost or actual cash value in case of a loss. "Actual cash value (ACV) is the amount it would take to repair damage to your home or to replace its contents after allowing for depreciation. Replacement cost is the amount it would take to rebuild or replace your home and its contents with similar quality materials or goods, without deducting for depreciation."
- Store copies of your life, automobile, homeowner's or renter's, and other types of insurance policies with your home inventory in a safe location away from your home, so that these records can be easily retrieved in the event of a loss.
- Keep a list of contact details for your insurance agent and/or company with your policies. Include office phone numbers, mailing addresses, Web site addresses and all of your policy numbers for quick reference.
- Learn what to do before and after a disaster. For instance, the NAIC suggest that you can mitigate — or lessen — your exposure to some types of disasters. In a hurricane-prone area, this might mean installing storm shutters, covering windows or checking the siding and roof of your home prior to the storm. Learn more tips on how to prepare for a disaster from the NAIC.
- Most homeowner policies don't cover flooding. Check out Floodsmart.gov to get more information on obtaining that type of coverage if you live in a flood-prone area.
Check Out Other Resources
AARP offers step-by-step guides on how to prepare for hurricanes in both English and Spanish. Learn more tips on how to prepare for a disaster from AARP.