Financial Emergency Plan for Natural Disasters

Creating a plan is vital to your economic future. Eakachai Leesin/Shutterstock

Although hurricane victims have some warning, fire and tornado victims have little notice that they are about to be hit with disaster. And besides lives, the financial losses of a natural disaster can be staggering. For example, according to AccuWeather’s numbers on Jan. 16, the California fires’ economic loss is, so far, between $250 billion and $275 billion.

Nearly 82,000 people from neighborhoods including Pacific Palisades and Altadena were evacuated. But how many of these people were financially ready? Did they have a financial emergency plan for natural disasters? Creating a plan is vital to your economic future.

Check Your Insurance Coverage

Insurance is not top of mind for a lot of people. But it can be the difference between being whole again or bankruptcy when there’s a natural disaster.

Check your policies yearly so that you know what is covered. Know your deductibles, because this will be your out-of-pocket cost. You may have a high deductible to lower your premium, but can you afford to pay the deductible amount if you suffer a loss from a disaster?

If needed, ensure you have flood and renter’s insurance. Your vehicle should have comprehensive coverage to pay losses caused by floods or other disasters.

Store your policy in a safe area that is handy if you need to evacuate. If your home sustains damage or is destroyed, it’s easier to file a claim and work with an adjuster if you have the policy.

Basic Documents That Should Be Accessible

Take the time to safeguard critical documents and have them in one place so you can access them all quickly. Some information you should have available are a photo ID, birth certificate, record of military service, and pet ID tags.

It’s also essential to have your and your family’s Social Security cards available. You'll need them to apply for grants from the Federal Emergency Management Agency (FEMA).

Financial and Legal Documents

Keep housing payments available so that you have records of financial obligations. Many individuals and families experience financial difficulty when experiencing losses from a natural disaster.

If you think you cannot make your loan repayments on time, immediately contact your financial institution and discuss your options. It’s important to do this before skipping payments. Remember, you don’t want to take any actions that are contrary to the loan’s terms.

If you have your records, you’ll have contact information.

As mentioned earlier, always have your insurance policy in an accessible place. You’ll also want to have your sources of income and creditors’ documentation in one place.

You’ll also need tax statements to apply for assistance from FEMA. And have all your banking documents available as well. FEMA may need to direct deposit any grants you’re eligible for into your bank account if you don’t have an address. Banking documents will speed up the process.

Ensure all of these documents are in one place. It makes it easier than hunting for various pieces during an emergency.

Document Your Belongings

When documenting belongings, start with your house. Walk around it and take photos of different angles. Do the same thing with your personal belongings. Take as many pictures as you can.

Write descriptions, including the make, model, and year of the items. Write down serial numbers and gather receipts. Note any unique features or customizations of your items.

If you have jewelry or artwork, have an appraisal done to determine their value.

Gather all this information and place it with your financial information so they’re all in one place.

Where Should You Store Your Documents

There are several places to store your valuable documents. One is a safe deposit bank. However, if there’s a large natural disaster, the bank may be damaged as well, and your papers may be lost. Some banks have virtual safe deposit boxes that offer online protection. These are safe from physical destruction. All your information can be scanned and stored.

Cloud storage is an option that is one of the safest ways to store documents. It’s free with many email accounts. Use your cloud space to upload PDFs of scanned documents. Ensure you have a strong password and multifactor authentication. You can also upload the pictures and information you gathered of your home and belongings.

Many people use a USB flash drive to store sensitive documents. Also known as a thumb drive, these portable hard drives offer a lot of storage and can be easily accessed. If forced to leave your home, you simply put it in your pocket and go.

Should You Use a Fireproof Safe?

There is some debate as to whether fireproof safes are indeed fireproof. And they are fireproof up to a specific temperature. For example, according to the Underwriter’s Laboratories and the National Fire Protection Association, a fireproof safe can withstand peak temperatures ranging from 1,150 degrees Fahrenheit to 1,850 degrees F.

It should be noted that the U.S. Department of Agriculture states that forest fires often reach and exceed 2,000 degrees F. This is equivalent to one-fifth the temperature of the sun’s surface.

This temperature can melt almost any building material or destroy sites if the surrounding temperatures get too hot. The fire doesn’t have to touch the building; it only has to be near it to destroy the building.

Forethought Will Save Time and Money

First, plan your evacuation route to ensure your family is safe. But to make sure you and your family are financially safe as well, gather your documents in one area so they are easily accessible. Better yet, keep them in a separate location.

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