Money Matters - Simplified

Tornado, Quake, Flood, Hurricane: Getting Wise Before They Strike

They don’t warn before they strike, but some common sense precautions help before, during, and after natural disasters.
During natural disasters, ATMs are down and access to cash gets very difficult. So, experts advise to always keep some cash handy--in different locations, such as your home and place of business, in case one structure doesn’t survive a natural disaster.

Tornadoes. Hurricanes. Floods. Snow storms. Fires. Quakes. Tsunamis. Now how about climate change? Natural disasters affect people at many levels--physical, financial, psychological, and many more. They devastate homes and hopes, wreck buildings, destroy crops, and kill people in their wake.

Some Resources for Disaster Management
1. http://www.dhs.gov, the official Web site of the U.S. Department of Homeland Security, for emergency supply list.

2. http://www.iii.org, the Web site of the Insurance Information Institute and hugely helpful resource. Be sure to visit the channel http://www2.iii.org/natural-disasters.

3. http://www.fema.gov, the Web site of Federal Emergency Management Agency. To know about assistance programs to those affected by disasters, visit http://www.fema.gov/assistance/index.shtm.

4. http://www.floodsmart.gov/floodsmart, the official Web site of the National Flood Insurance Program. Visit the site for information about flood risk and flood insurance.

According to the Associated Press, the latest toll in tornado mayhem in the South is at least 342 across seven states, including 250 in Alabama alone.

“The 21st Century has already been marked by escalating economic losses and human devastation caused by natural disasters,” the UN Bureau for Crisis Prevention and Recovery noted.

Disaster-proofing Your Finances
As climate change may cause spooky weather patterns and increasing possibility of natural disasters, people would do well to financially prepare for natural disasters. Disaster preparedness consists of the efforts to plan, mitigate, and manage the damage and sift through the wreckage.

Cash
During natural disasters, ATMs are down and access to cash gets very difficult, Larry Palmer, financial advisor with Morgan Stanley Private Health Management, tells CBSlosangeles.com while sharing financial advice in the event of a natural disaster.

“Keep cash in different locations, such as your home and place of business in case one structure doesn’t survive a natural disaster,” he says and adds, “everyone should have a one month supply of cash in a safe or alternate place.”

Assets
Since your local financial institution may not be running in the event of a natural disaster, Palmer cautions to “make sure your assets are spread out among a few financial institutions and one should be a national institution.”

It is also better if you lean on one “trustworthy person to be the executor of your estate.”

Financial Account Information
It is better to share your financial account information with a trusted friend or relative. Nobody knows what is in store for anybody in the event of a natural disaster. So, Palmer continues, the trusted person, “should have a hardcopy of your financial account information and assets (including passwords) so he/she can access your account in case you need it.”

Insurance
In most cases, businesses, homes, and cars are underinsured. You have to make sure “you have comprehensive insurance for your assets so that any liability you have based on a natural disaster can be transferred to the insurance company.”

Owning an insurance policy is not the same thing as having a disaster recovery plan. People assume that insurance companies will take care of everything. But it doesn’t work like that.

To avoid the prospect of arguing with insurance adjuster in the wreckage of your home about what your insurance does and doesn’t cover, marketwire.com points to Steve Slepcevic, founder of Paramount Disaster Recovery, Inc., as saying, “having help in documenting the damage, complete with the proper terminology, significantly increases insurance company settlements and will often speed up its processing.”

More on Flood Insurance
Flooding is the number one natural disaster, according to the Federal Emergency Management Agency (FEMA). Homeowner’s insurance doesn’t cover flood damage. So, the more information you have about insurance coverage, the better.

Bill Loughborough, founder and CEO of Credit Answers, a Texas-based debt settlement company, says, “FEMA indicates that only 25 percent of the 10 million homes that lie within high flood risk zones carry flood insurance.

“In order to obtain flood insurance, you must live in one of the 20,000 communities that participate in the National Flood Insurance Program(NFIP), a component of FEMA that handles flood insurance, floodplain management and flood hazard mapping.”