A little planning can ease the financial hardship
You may not think a disaster can hit you, but a disaster of some sort can occur just about any place, at any time, with little or no warning. Garrett Sorensen knows that. His car was totaled when a powerful tornado hit Covington, Tennessee, on March 31: “The building I was in was destroyed and vehicles were moved up to 50 feet by the F3 [storm] that hit us directly. Luckily, we were all safe, but the damage is devastating.”
According to the NOAA National Centers for Environmental Information (NCEI), as of June 21 — just three weeks into hurricane season — nine confirmed weather/climate disaster events costing at least $1 billion each have hit the U.S. this year. Last year, there were 18 such occurrences, including winter storms, cold waves, droughts, heat waves, wildfires, tornadoes, floods, as well as hurricanes Fiona, Ian and Nicole.
Sorensen, in Old Hickory, Tennessee, advises planning for disasters so your finances can recover as quickly as possible should a catastrophe strike. Also, if you’re badly injured, incapacitated or die unexpectedly, your preparations will enable your loved ones to respond.
Consider the following tips. A little planning may render some peace of mind, especially if weather-related events are common in your area.
1. Safeguard your vital documents
First, if you haven’t done so, assemble all of your financial, medical and legal documents. The Federal Emergency Management Agency (FEMA) offers the Emergency Financial First Aid Kit (EFFAK) to help you get organized. EFFAK offers a handy checklist and helpful suggestions for gathering these items, as well as medical information and forms. You’ll also find advice about managing finances, what to expect in a disaster, how to prevent identity theft and pet preparedness.
Be sure to place these materials in a waterproof and fireproof grab-and-go bag or backpack you can easily access, should you need to evacuate your home. Then, look for a safe place to store these materials outside of the affected area, such as the home of a friend or relative.
“If a disaster or other emergency strikes your community, you may only have seconds or minutes to react,” the agency writes in the kit’s introduction. “Once the threat of harm has passed, having your homeowner’s or renter’s insurance policy, bank account information, and other household records and contacts will be very important as you begin the recovery process.”
FEMA also offers an app (called FEMA, naturally) that you can download at Google Play or the Apple Store. You can use it to apply for individual assistance, check your application status, find emergency shelter, visit a disaster recovery center and find out what to expect when you apply for assistance. In addition, ready.gov and disasterassistance.gov offer helpful information.
2. Redundancy pays: Keep digital and paper files
Also, consider saving your EFFAK at a secure financial portal online. One example is Easeenet.com. There’s a free version, which offers secure encryption; a password manager with up to five logins; document storage and sharing; a legacy worksheet where you list important details you want others to know; and a legacy contact who may access your account in your absence. You can also store important documents securely with Google Drive, Microsoft OneDrive and Dropbox, among others.
Like most of us, you probably have numerous usernames and passwords to manage. In that case, consider signing up now for a dedicated password manager for all of your digital assets, such as Last Pass, NordPass or Bitwarden, so you can access them from your phone, tablet or laptop easily.
Those assets include email, financial, utility, insurance, e-commerce, subscription and social media accounts; personal websites, blogs and file-sharing accounts; and cloud storage, which may contain your treasured music and photos. Don’t forget your physician, dentist, Social Security, Medicare and tax preparation accounts. In an emergency, the ability to access these important sites via your laptop, tablet or smartphone may be essential.
3. Kept abreast of your insurance
Make sure you’re clear about the insurance coverage you have, and the deductibles. Sorensen recommends reviewing your coverage at least twice a year. Include your health, auto, home and flood insurance, if you have it. “Knowing what you are covered for and how to go through the process will help ease the stress you feel after a disaster strikes,” he says. “I was in a rental vehicle less than 12 hours after the tornado hit because I knew the process I needed to go through because I stayed aware of what my insurance provided.”
Kevin Lum, a CFP at Foundry Financial in Los Angeles, says aid from FEMA and other agencies is typically available only for major disasters and may not cover all, if any, of your expenses. “So, you want to make sure you have proper insurance coverage.”
Another reason to review your coverage is the effect inflation has had on the cost of materials and repairs, says Mike Martinez, president and CEO of M Martinez & Associates in Metairie, Louisiana, who has been through several natural disasters. Otherwise, you may come up short when you file a claim. “You could be left paying out-of-pocket expenses that could’ve been covered by insurance,” he says.
4. Take an inventory of your possessions
Next, create proof of your possessions. For your home and its contents, insurance carriers recommend using a video camera or your phone or tablet to document each room, zooming in closely, and adding narration to describe items of the highest value. You can also make a list on a spreadsheet, if you wish. Or use an inventory app such as Itemtopia or the NAIC Home Inventory.
Whichever method you use, be sure to review and revise it every year, or anytime you do a significant remodel to your home or make a major purchase. You might also want to register expensive products such as electronics and appliances for any insurance or warranty claims. Don’t forget to include this inventory in your grab-and-go bag.
5. List phone numbers of local officials and insurers
When a storm or flood hits, what should you do first? Assuming that you don’t need first aid or more extensive medical attention, you’ll want to quickly let local officials know the damage you’ve incurred and what immediate assistance you need. Make sure you have these important numbers on your phone and in your grab-and-go bag.
Unfortunately, some people will take advantage of those who need help, so be alert to scammers and price gougers, says Chuck Czajka, a certified estate planner and founder of Macro Money Concepts in Stuart, Florida. “Also, document everything and communicate with your insurance providers to understand what they will cover and what you will need to pay out of pocket,” he says. “Be patient, as a natural disaster typically impacts many people. Recovery and repair times may take days, weeks or even months.”
6. Have a rainy day fund to tide you over
It’s always important to have a cash stash to cover unexpected bills so you’re not forced to raid your retirement fund to cover living expenses. But that’s especially true in the event of a calamity, Martinez says. If your home is damaged or gone, you’ll need money for a place to live, among other things. “After a disaster, the cost of water, food, hotel stays, transportation, etc., will need to come out of an emergency fund.”
Insurance companies can take weeks to help, Sorensen says: “Having the funds available to cover that waiting period will feel like a lifesaver at a terrible time.” The same is true for FEMA and other government agencies, Lum says: “While aid is available, it may take time to receive it. People should be prepared to rely on their own resources in the meantime.”
7. Be ready with a stash of essentials
Are there disaster preparation efforts in your area? If so, Czajka recommends participating. Florida, for example, has Hurricane Preparedness Week, which encourages residents to plan for a hurricane or other disaster.
“When it comes to food and water, anticipate needing at least a week’s worth,” Czajka says. Medications should be up to date and refilled. You should also have flashlights and batteries, a backup battery for your phone, and some cash in case there’s a power outage. Credit cards and ATMs may not be usable. “Your home may be unlivable in the event of a natural disaster, so having a backup plan for shelter and food is critical.”
8. Take care of yourself and your loved ones
Finally, Lum says to prioritize self-care and seek emotional support as needed, in a time of great distress: “Recovering from a disaster can be stressful and overwhelming, and it’s important to take care of oneself during the process. Maybe take some time and visit family.”
https://www.aarp.org/money/budgeting-saving/info-2023/recover-financially-from-natural-disasters.html