What’s more, the number of disasters has increased by a factor of five over the past 50 years, according to a 2021 report from the World Meteorological Organization (WMO), called the most comprehensive review of mortality and economic losses from weather, water, and climate extremes to date. This report found that, between 1970 and 2019, disasters linked to weather, climate, or water hazard averaged one per day. More specifically, these types of disasters accounted for 50 percent of all disasters, 45 percent of all reported deaths, and 74 percent of all reported economic losses. Despite these startling facts, 71 percent of those who responded to the Wells Fargo survey admitted they do not have an emergency plan to cope with a natural disaster. Such a plan would address immediate needs like having a go-bag packed with essentials should you have to evacuate immediately or a garage filled with essentials to see you through an emergency, as well as being prepared financially for the unfortunate realities faced by survivors of natural disasters. Here’s a closer look at how to prepare financially for a natural disaster that affects your part of the world. “Save important financial documents, such as birth and marriage certificates, wills, deeds, tax returns, insurance policies, and stock and bond certificates, on a thumb drive,” says Rullah Price, head of public affairs resiliency and enterprise incident communications for Wells Fargo. “These records are often needed for tax and insurance purposes.” Alternatively, prepare an emergency document kit, advises Paul Sundin, a CPA and tax strategist with Estate CPA. “When disaster strikes and you need to flee right away, you just grab this kit along with your other essentials,” he says. “This kit should contain copies of important documents, such as homeowners’ insurance policies, health insurance policies and information, deeds, recorded real estate documents, and information on all investment and financial accounts. Store these in a waterproof and fireproof box.” Another option is to photograph or scan your paper documents and store them securely in a Cloud storage environment, where you can retrieve them from any device after the disaster, says John Bodrozic, cofounder of the digital home management platform HomeZada. “Your home is probably your largest financial asset and biggest expense, so if it’s destroyed by a natural disaster, you must have access to all your important records to be able to financially recover quickly,” he says. You also want to document the condition of your home. “Photograph the interior and exterior of your home, including landscaping,” Price explains, “making special note of any improvements, such as a patio, fencing, or outbuildings, as these may increase property value and help with insurance claims.” While you’re at it, write a list of important possessions. Pat Howard, licensed home insurance expert for Policygenius, suggests creating a home inventory of your personal belongings such as clothes, appliances, and electronics. “This will increase your chances of a successful insurance claim,” he says. “When putting together your inventory, include product descriptions, prices, photos, receipts, and anything else that can improve your chances of a more accurate payout in the event your things are damaged.” If your possessions are damaged due to a natural disaster, contact your insurance company as soon as possible and provide them with as much proof as possible, including before and after photos of your items. If possible, Carrie Friedberg of SF Money Coach recommends keeping as much as 12 months of savings in a separate account that’s designated for such emergencies. “If a natural disaster struck and you experienced an interruption of income, you could live on this money during the transition period,” she says. “Being proactive with a safety net savings account will contribute to your emotional and financial security, whether you ever use it or not.” Part of protecting your finances involves protecting your credit. If a natural disaster occurs, Price of Wells Fargo recommends reaching out to creditors to ask for a temporary reprieve on payments. “It’s a good idea to include the contact information for your creditors—such as your mortgage lender, credit card companies, and utilities—in your emergency document kit,” he says. If you haven’t already, consider switching any income received from an employer or other source to direct deposits. This ensures continued access to that money if you become displaced from your home (or where you receive mail). “If you receive paychecks, Social Security checks, or other income via regular mail, you could find yourself in trouble if a disaster disrupts postal service,” says consumer finance expert Tanya Peterson, vice president for Freedom Financial Network. “Many, if not most, companies and organizations now provide direct deposit at no extra charge.” It’s also critical for homeowners to know that, while standard homeowners’ insurance covers most types of extreme weather, some types of natural disasters aren’t covered and require additional coverage. “For example, most people don’t realize that a standard home insurance policy doesn’t cover damage from flooding or earthquakes,” says Howard at Policygenius. “But not everyone knows this, and it often leads to people being underinsured and having to rely on federal disaster aid or covering expensive repairs out of pocket.” In fact, 53.3 percent of homeowners don’t realize that flood damage isn’t covered by a typical homeowner’s insurance policy, according to a 2020 Policygenius survey. Further, over 80 percent of homeowners don’t realize that earthquake damage is also not covered by a standard policy. “It’s important to make sure your home and insurance policies are fully prepared in advance of inclement weather or natural disasters,” adds Howard. For example, if your area is prone to hurricanes, “Many insurance companies place a moratorium on new policies once a tropical storm has been announced by the National Weather Service, so it’s important to check your coverage and make adjustments well in advance of hurricane season.” “Having proof of a passed roof inspection with photos or videos can improve your chances of a successful claim,” explains Howard. “After a storm, contact your insurance company as soon as possible to let them know of any damages, and document the damage thoroughly before you start making temporary repairs.”
