Getting Your Finances in Order Before Disaster Strikes

Every year, natural disasters create billions of dollars of losses in the U.S.  In 2014 alone, natural disasters created $25 billion dollars in both economic and insurance losses.

While there are some regions of the country more prone to disasters, being prepared for a disaster is good no matter where you live.

When planning for disaster, you will need to consider:

Insurance coverage. First, make sure your home and property are insured.  Second, make sure you are covered for the likely risks in your area.  For example, floods and earthquakes are generally not covered by homeowner’s or renter’s insurance.  If you live in an area prone to either of these potential disasters, explore getting additional insurance. You will want to make sure you have a policy that pays replacement cost, not actual cash value, in the event of a loss.  What is the difference?  Replacement cost starts with the amount you paid for the property, but pays what it will cost you to replace the damaged or lost property in the current market.  Actual cash value starts with what you paid for the property, but factors in depreciation. You may not receive enough money to rebuild your home, for example, under an actual cash value policy.  People choose actual cash value policies over replacement cost policies because the premiums are less expensive.

Communications plan. How you will communicate with family members or friends during a disaster. This may include a designated meeting place depending on the type of disaster.

Supplies to weather a disaster. You may need a “go bag” for everyone in the household that includes a change of clothing, medications, portable food (including infant formula if you have a baby) and water.  If someone is the household has a disability, include any assistive devices they may need. Make sure this also includes a flashlight, jacket and other outwear, and phone and phone charger for each person. If possible, someone should also have a portable radio and extra batteries.  Emergency information is often broadcast over the radio.

Pets. Every natural disaster seems to include stories about pets separated from their families. Be sure to consider their needs in the case of an emergency. Whether you are sheltering in place or evacuating your home, make sure you have pet food, water, sealing plastic bags, and pet leashes or kennels for transporting your animals.

Important documents. Consider purchasing a waterproof, fireproof lockbox to store essential documents including:  driver’s licenses, passports, birth certificates, and immigration documents.  This would include any documents that will help you restart your life should your home be lost during a disaster.

Financial information.  Add essential financial information to your waterproof, fireproof lock box.  Financial documents could include: bank account information, retirement or investment account information, credit cards, insurance policies, and deeds or titles to your home and cars. In addition to making sure you have your credit and debit cards, it’s also a good idea to have some cash on hand, too.  While there is no specific guideline for the amount, having $500 in cash in addition to your credit and debit cards provides you with more flexibility in a disaster.

A Home Inventory. You may want to take an inventory of everything in your home.  With digital photography, whether using a smart phone or camera, it’s easy to take pictures of your furniture, clothing, or other personal property that could be destroyed in a disaster.  This will make filing a claim much easier—you can prove what you owned before the disaster.

Back Up Electronic Files. If you have financial information, including tax returns, on a computer, consider a back up of your computer an essential item.  You may also benefit from having your pictures on this drive as well.