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Financial Preparation
While planning for a disaster, you should also consider preparing financially for by:
1. Protecting your property
- Install smoke detectors in your house or apartment to warn of a fire
- Clear surrounding brush to protect your home against wildfires
- Secure objects that could fall and cause damage in an earthquake, such as a bookcase.
- Install hurricane shutters on windows and prepare plywood covers for glass doors.
- Cover windows, turn off utilities, or move possessions to a safer location if you have adequate warning of something like a hurricane or flood.
- If your home is in a high risk flood area, on a fault line, or threatened by coastal erosion, consider relocating.
- Have your house inspected by a building inspector or architect to find out what structural improvements could prevent or reduce major damage from disasters.
2. Conducting a household inventory
Make a list of everything you own in your home. Having this list could help you to prove the value of what you owned if those possessions are damaged or destroyed and make it more likely you will receive a fast, fair payment from your insurance company for your losses.
- Record the location of the originals of all important financial and family documents, such as birth and marriage certificates, wills, deeds and insurance policies. Keep the originals in a safe place and store copies elsewhere.
- Make a visual or written record of your possessions. If you don't own a camera or videotaping equipment, use notebook paper.
- Go from room to room, describing each item, when you bought it and how much it cost. If you are photographing or videotaping, have someone open closet doors and hold up items so that you can record them.
- Record model and serial numbers for electrical and electronic equipment.
- Include less expensive items, such as bath towels and clothes. Their costs add up if you have to replace them.
- Be sure to include items in your garage and other storage areas.
- Note the quality of building materials, particularly for such furnishings as oak doors or expensive plumbing fixtures.
- Photograph the exterior of your home. Make special note of any improvements, such as a patio, fencing, or outbuildings.
- Photograph cars, boats, and recreational vehicles.
- Make copies of receipts and canceled checks for more valuable items.
- Get professional appraisals of jewellery, collectibles, artwork, or other items that are difficult to value. Update the appraisals every two to three years.
- Update your inventory list annually.
Once you have completed your inventory, leave a copy with relatives or friends, or in a safe deposit box. Do not leave your only copy at home, where it might be destroyed in a disaster.
3. Buying insurance
Even with adequate time to prepare for a disaster, you still may suffer significant, unavoidable damage to your property. This is when insurance for renters or homeowners can be a big help. Yet, many people affected by disasters have been underinsured or not insured at all. Make sure you buy the insurance you need to protect against the perils you face.
If you own your own home, you should ensure that you:
- Have your home periodically reappraised to be sure the sum insured reflects the real replacement cost.
- Update the policy to include any home improvements, such as additions or renovations.
- Buy a policy that covers the replacement cost of your possessions.
- Be very clear about what the policy will and will not cover, and how the excess works (the part you pay before the policy pays).
- Use your home inventory list to check that your policy's coverage matches the value of your possessions.
If you are a renter:
- Find out what insurance coverage your landlord has on the property.
- Considering buying Householder's insurance, which pays for damaged, destroyed, or stolen personal property. Your landlord's insurance won't cover damage to or loss of your possessions. Also, consider special coverage like flood insurance for your belongings.
- Be clear about what a policy will cover. Some policies cover more than others. For example, will the policy pay for living expenses if you have to live somewhere else temporarily, or for damage from sewer backup?
Be sure that you understand what perils your insurance policy covers so that if a disaster strikes you know exactly what you are entitled to receive from your insurance company.
4. Keeping cash on hand
After a disaster, you may need cash for the first few days, or even several weeks. Income may stop if you can't work. To help stay solvent you should consider doing the following:
- Keep a small amount of cash at home in a place where you can get to it quickly in case of a sudden evacuation, since a disaster can shut down local ATMs and banks. The money should be in small denominations for easier use.
- Set aside money in an emergency fund. That can be hard to do on a tight budget, but it can be well worth the effort. The fund can be very helpful, not only in a disaster, but in other financial crises, such as during unemployment or when unexpected expenses like legal fees arise.
- Keep your emergency funds in a safe, easily accessible account, such as a savings account or a money market account.
- Pay off your credit cards every month. You may have to draw on them to help with expenses during a disaster.
5. Keeping an evacuation box
Buy a lockable, durable "evacuation box"; even a cardboard box would do. Put important papers into the box in sealed, waterproof plastic bags and store the box in your home where you can get to it easily in case you need to evacuate. Keep this box with you at all times. The box should contain:
- A small amount of cash.
- Negatives for irreplaceable personal photographs, protected in plastic sleeves.
- A list of emergency contacts, including doctors, financial advisors, clergy, reputable repair contractors, and family members who live outside your area.
- Copies of important prescriptions for medicines and eyeglasses, and copies of children's immunization records.
- Health insurance cards or information.
- Copies of your auto and homeowners insurance policies, or at least policy numbers, and a list of insurance company telephone numbers.
- Copies of other important financial and family records (or at least a list of their locations), including: deeds, titles, wills, birth and marriage certificates, passports, relevant employee benefits documents. Originals should be kept in a safe deposit box or at another location.
- Backups of computerized financial records.
- A list of bank account, loan, credit card, driver's license, investment account (brokerage and mutual funds), and tax registration numbers.
- Safe deposit box key
Taking even limited action on some of these items now will go a long way toward preparing you financially before a disaster strikes.
Article Adapted from the American Red Cross
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