Before Disaster Strikes

7/28/2019 Before Disaster Strikes

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Pro tec tyour p roper ty

Oneof thefirst thingsto do isfind

out what disasterscould strike

whereyou livefire, flood, earth-

quake, hurricane, or tornado, for example. The

followingstepscan helpyou avoid or reduce

substantiallythe potential physical

destruction to your property

if youwereto behit with a

disaster. Thesestepscan

reduceyour i nsurance

costs, too. For exam-

ple, you could:

s Install smokedetectorsto warn of an

apartment or home fire.

s Elevateuti lities to upper floor or attic.s Clear surroundingbrushto protect your

homeagainst wildfires.

s Anchor your houseto the foundation,andanchor theroof to themain frame.

s Secureobjectsthat couldfall and causedamagein an earthquake, such asa

bookcaseor hot water heater.

s Install hurricaneshutterson windows,andprepareplywood coversfor glass

doors.

s Cover windows, turnoff utilities, ormovepossessionsto asafer location if

youhaveadequatewarningof some-thinglikea hurricaneor flood.

s If your homeis in ahighrisk flood area,on afault line, or threatenedbycoastal

erosion, consider relocating.

s Haveyour houseinspectedby abuildinginspector or architect tofind out what

structural improvementscould prevent

or reducemajor damagefrom disasters.

s If youhavent yet bought a house, youmight takeconstruction typeinto

account. Framehousestend to with-

standsomedisasters, while brick homes

hold upbetter inothers.

If yourenot surewhereto start, you could

contact your local firedepartment if you

live in wildfirecountry. Fire departments

will oftenmakehousecalls toevaluate

your propertyand makesuggestionson

how to improvesafety. I n earthquake-prone

areas, thelocal utility canbecalledupon tocometo your locationand show you how and

whereto shut off gaslinesor how toelevate

utilitiesto get themaboveapossibleflood.

Conduct ahouseholdinven to ry

Inventoryyour householdpossessionsby

makingalist of everythingyou own. If

disaster strikes, thislist could:

s Helpyouprovethe valueof what youowned if thosepossessions aredamaged

or destroyed.

s Makeit morelikely youll receiveafast,fair payment fromyour insurancecompanyfor your losses.

s Providedocumentationfor tax deduc-tionsyou claimfor your losses.

To conduct athoroughhomeinventory:

s Recordthelocationof theoriginalsof allimportant financial and familydocuments,

suchasbirthandmarriagecertificates,

wills, deeds, tax returns, insurancepoli-

cies, and stock andbondcertificates. Keep

theoriginalsin asafeplaceandstore

copieselsewhere. Youll needaccessible

recordsfor tax and insurancepurposes.

s Makea visual or writtenrecord of yourpossessions. If you dont ownacamera

or videotapingequipment (and cant

borrow or rent it), buyaninventory

booklet and fill it out, or makeasimple

list on notebook paper. Ask your insur-

anceagent if he or shecanprovideone.

s Go fromroomto room. Describeeachitem, whenyou bought it, and how

much it cost. If yourephotographingor

videotaping, havesomeoneopen closet

doorsand hold upitems.

s Record model and serial numbers.s Includelessexpensivei tems, suchas

bathtowelsand clothes. Their costsadd

upif you haveto replacethem.

s Besureyou includei temsin your attic, basement, and

garage.

s Notethequalityof buildingmaterials, particularly for such

furnishingsasoak doorsor expen-

siveplumbingfixtures.

s Photograph theexterior ofyour home. Include the

landscapingthat bigtree

in the front yard maynot

beinsurable, but it does

increasethe

valueof your

propertyfor tax

purposes. Make

special note of

anyimprove-

ments, such asa

patio, fencing, or outbuildings.

s Photograph cars, boats, and recreationalvehicles.

s Makecopiesof receiptsandcanceledchecksfor morevaluable items.

s Get professional appraisalsof jewelry,collectibles, artwork, or other i temsthat

aredifficult to value. Updatethe

appraisalseverytwo to threeyears.

s Updateyour inventoryli st annually.Sound like too much work? Computer soft-

wareprogramsdesigned for such purposescan

makethe task much easier. Theseprograms

arereadilyavailablein local

computer stores.

Most important, onceyou have

completed your inventory, leavea

copywith relativesor friends, or in a

safedeposit box. Dont leaveyour only

copyat home, whereit might

bedestroyed.

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Buy insurance

Evenwith adequatetimeto prepare

for adisaster, you stil l maysuffer

significant, unavoidable damageto

your property. Thatswhen insurancefor renters

or homeownerscanbeabig help. Yet, many

peopleaffected byrecent disasters

havebeen underinsuredor

worsenot insuredat all.

Homeownersinsurance doesnt

cover floodsand someother

major disasters. Makesure you

buythe insuranceyou needto

protect against theperilsyou face.

I f you own a home:

s Buy, at aminimum, full replace-ment or replacement cost coverage.

Thismeansthestructurecan bereplaced

upto thelimitsspecified in thepolicy.

s Investigatebuyingaguaranteed replace-ment cost policy. When and where

available, thesepoliciescan payto

rebuild your house, includingimprove-

ments, at todaysprices, regardlessof

thelimitsof the policy.

s Haveyour homeperiodically reappraisedto besurethepolicy reflectsthereal

replacement cost.

s Updatethepolicy to includeanyhomeimprovements, such as basement

refinishing. Annual automatic increases

maynot beenoughto cover these.

s Buya policythat coversthereplace-ment cost of your possessions. Standard

coverageonlypaysfor the actual cash

value(replacement cost discounted for

ageor use).

s Bevery clear about what thepolicywi llandwill not cover, and how the

deductibleswork (thepart you pay

beforethepolicypays).

s Check state-operated or feder-allyoperated insurancepools

if youfind it difficult to obtain

privatecoveragebecauseof a

recent disaster. Premiums

often run higher than market

rates, but this isbetter than

no coverage.

s Useyour homeinventorylist tocheck that your

policyscoverage

matchesthevalueof

your possessions.

I f you ren t :

s If you arerenting, consider locatingoutsideahighrisk flood areaor away

fromafault line.

s Buyrentersinsurance, which paysfordamaged, destroyed, or stolenpersonal

property. Your landlords insurance wont

cover damage to or loss of your posses-

sions. Also, consider special coveragelike

flood insurancefor your belongings.

s Beclear about what apolicy will cover.Somepoliciescover morethan others.

For example, will thepolicypayfor living

expensesif youhaveto livesomewhere

elsetemporarily, or for damagefrom

sewer backup?

s Comparison shopfor the best coverageat thebest price. Other than govern-

ment flood insurance, policiesvaryfrom

company to company. Policiesin most

areasare veryaff ordable.Start with

thecompanythat insuresyour car.

Discountsareoften availablei f youcarry

morethan onepolicy with acompany.

I f you are moving:

s Select ahomein an areanot on afaultline, in aflood area, or at risk from

coastal erosion.

Consider specialcoverage

Insurancefor rentersandhomeownerswont

cover certain typesof losses. Ask your insur-

anceagent or financial planner about special

or additional coveragefor thefollowing:

Floods. Homeowner policiesdont coverdamagefrom flooding. Call your current

insurancecompanyor agent first about

gettingcoverage. If your companydoesnt

providefloodinsurance, call theNational

Flood InsuranceProgramat (800) 427-

4661, whichcanprovideyou withthe

nameof anagent in your areawho writes

flood insurance. Asof 1997, the

averagepremiumis$300a year

for $98,000 of coverage.

Earthquakes.Premiumstypically

arehigh ($5,000

annually for a

$200,000

home), and deductiblesmayrangefrom

5%to 20%of the policyscoverage.

Still, such coveragemaybebetter than

no coverage. (Earthquakecoveragefor

thecontentsof ahomeusually is sepa-

rate. You also mayneed separatecover-

agefor masonryand plateglass.)

Home o ffi ces . Somepoliciesautomat-ically extend coverageto computer

equipment and afew other itemsof

businessproperty. Talk to your agent to

determinewhat itemswould or would

not becovered. If necessary, you could

buyadditional businesscoverageat a

modest cost. Or it maybebetter to buy

aseparatesmall businesspolicy, which

wouldalsoprovidemorecoverage.

Bui ld ing codes. Ask your agentabout additional insuranceto cover the

costsof meetingnew, stricter building

codes. Frequently, after adisaster people

get socked with rebuilding coststhat are

much higher becausebuildingcodes

havechanged. All current codesmust

bemet when rebuilding. Consider addi-

tional structural improvementsthat

providemoreprotection.

Other po ten t ia l p rob lems.Thiswould includeproblemssuchas

underground mines(located beneath

your property), sewer backup, or

mudslides.

Big- t i cke ti tems.Purchase

additional cover-

agefor specificjewelry,

collectibles, artwork, furs, or

other big-ticket items.

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Whereto keepcash

After a

disaster,

youmay

needcash for thefirst

few days, or even

several weeks. Income

maystopif you cant work. Tohelpstay

solvent, consider the following:

s Keepa small amount of cashor travelerschecksat homein aplacewhereyou can

get at it quickly in caseof asudden evac-uation. A disaster can shut downlocal

ATMsand banks. The moneyshouldbe

in small denominationsfor easier use.

s Set asidemoneyin an emergencyfund.That canbetough todo onatight bud-

get, but it can bewell worth theeffort.

Thefund canbeveryhelpful, not onlyin

adisaster, but in other financial crises,

such asduringunemployment or when

unexpected expenseslikelegal feesarise.

s Keepyour emergency fundsin a safe,easily accessibleaccount, such asa

passbook savingsaccount or amoney

market account.

s Keepsomefunds outsidethelocal area,sincethe disaster that affectsyoucould

also affect your local financial institu-

tions. A mutual fund moneymarketaccount inanother cityor stateisone

option to consider.

s Keepyour credit cardspaid off. You mayhaveto draw on themto tideyouover.

Use anevacuat ion b ox

Buya lockable, durable evacuation

box tograbin theevent of an

emergency. Even acardboard box

woulddo. Put important papersinto thebox in

sealed, waterproof plastic bags. Store the box in

your homewhere you can get to it easily. Keep

thisbox with you at all times, dont leaveit in

your unattended car.

Thebox should belargeenough to carry:

s A small amount of travelerschecksorcashand afew rollsof quarters.

s Negativesfor irreplaceablepersonalphotographs, protected in plastic sleeves.

s A l ist of emergencycontactsthatincludesdoctors, financial advisors,

clergy, reputable repair contractors,

andfamilymemberswho liveoutside

your area.

s Copiesof important prescriptionsformedicinesand eyeglasses, and copiesof

childrensimmunization records.

s Health, dental, or prescription insurancecardsor information.

s Copiesof your auto, flood, renters, orhomeownersinsurancepolicies(or at

least policy numbers) and a list of i nsur-

ancecompanytelephonenumbers.

s Copiesof other important financial andfamily records(or at least ali st of theirlocations). Thesewould include deeds,

titles, wills, a letter of instructions, birth

and marriagecertificates, passports,

relevant employeebenefitsdocuments,

thefirst two pagesof thepreviousyears

federal and stateincometax returns,

etc. Originals, other than wills, should

bekept in asafedeposit box or at

another location.

s Backupsof computerizedfinancialrecords.

s A list of bank account, loan, credit card,driverslicense, investment account

(brokerageand mutual funds), and

Social Security numbers.

s Safedeposit box key.

Rent a safedeposi t box

Safedeposit boxesareinvaluablefor

protectingoriginalsof important

papers. If you dont havea safe

deposit box, keep copiesin your evacua-

tion box or with familyor friends.

Originaldocumentsto storein a

safedeposit box include:

s Deeds, titles, andotherownership recordsfor your

home, autos, RVs, boats, etc.

s Birthcertificatesand naturaliza-tion papers.

s Marriagel icense/divorcepapersandchild custodypapers.

s Passportsand military/veteranpapers.s Appraisalsof expensivejewelryand

heirlooms.

s Certificatesfor stocks, bonds, and otherinvestments.

s Trust agreements.s Living wills, powersof attorney, and

health carepowersof attorney.

s Insurancepolicies(copiesaresufficient).s Homeimprovement records.s Household inventory documentation.Generally, originalsof wills should not bekept

in asafedeposit box sincethebox maybe

sealed temporarily after death. Keeporiginals

of wills with your local registrar of wills or

your attorney.

Decidingon a safeand convenient location is

an issue. You maywant to consider rentinga

safedeposit box in abank

far enough awayfrom

your homeso it isnot

likely to beaffected by

thesamedisaster that

strikesyour home(for

instance, bank vaults have

been flooded). Keepthe key

to thesafedeposit box in

your evacuation box.

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Home safesa n d fi r e b o x es

Safesand fireboxescanbe convenient

placesto store important papers.

However, somedisasters, suchas

hurricanes, floods, or tornadoes, could destroy

your home. Usually, itsbetter to storeoriginal

papersin asafedeposit box or at another

locationwell awayfromyour home.

I f youhave t ime. . .

Somedisasters, such as

tornadoesor earthquakes,

strikewithli ttleor no

warning. Others, such asfloodsor

hurricanes, mayallow sometimeto

prepare. If there isenoughtime, you

could takethe followingactions:

s Decidewhat household itemsyouwould put on averyshort priority list.

For example, imagine you could take

onlyonesuitcaseor pack asingle

carload. What would you take? Involvethewhole familyin thisdiscussion.

s Takejewelryand other small valuables.

s Takeirreplaceableheirlooms, mementos,andphotos.

s Dont bother with replaceablei temssuch astelevisions, furniture, computers,

andclothing (except what you need to

wear for afew days).

s Besure, however, to takea battery-powered radio and sparebatteries so

you can stayinformed.

s Takeimportant papersandcomputerdisksif you haveahomebusiness.

Whew! Thesearea lot of ideas. Youmaynot be

ableto do everythingthat is suggestedthats

OK. Do what you can. Takingeven limited

action now will go a longwaytoward preparing

youfinancially beforeadisaster strikes.

For moreinformation, contact your

local Red Crossor officeof emer-

gencymanagement. There you can

find out what thepotential is for

variousdisasters in your areaor

how you can help otherswho are

affected byadisaster. You also can

pick upabrochurethat givesyou

adviceon how to recover financially

afteradisaster strikes.

Tofind moreinformationon the

Internet, contact

FEMA ww w. f em a.gov

Red Cross ww w. cro ssnet .org

NEFE www .nef e.org

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This brochure is made available through your local

American Red Cross and the Federal Emer gency

Management Agency. It is provided as a public service of

the Red Cross and the Public Education Cent er of the

Denver-based Nation al Endowment for Financial Education.

All Red Cross disaster relief is free of charge a gift of the

American people. The Federal Emergency Management

Agency provides assistance princi pally low cost loans

for disaster r ecovery from Presidentially declared disasters.

The National Endowment is an independent non-pr ofiteducational organization dedicated to improving the finan -

cial well-being of Americans.

CFPandCERTIFIED FINANCIAL PLANNERare federally

registeredservicemarksofthe CertifiedFinancial Pl anner

Boardof Standards, Inc.


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How to make sureyourefinanciallyprepared

to deal with a natural disaster

PublishedbytheAmericanRed Cross,theFederal EmergencyManagement Agency,

and the National Endowment for Financial Education

Sound adv icefo r p eop le i n

need. Broughtto you by. . .

ARC5075 RevMay1997

FEMA 291E

Documents

Before Disaster Strikes