When natural disasters strike, the emotional, mental and physical toll can be staggering. Just finding safe shelter and clean water, once taken for granted, can be a formidable challenge. But taking care of your financial health in the wake of a natural disaster is another important priority.
If there's a silver lining, it's that people affected by a hurricane, flood, earthquake or other harmful occurrence can recover from potential financial disaster. While lost documents, tough insurance claim scenarios and other monetary threats present challenges, they can usually be overcome. The keys to doing so, experts say, are awareness, preparation, professional guidance and a bit of creativity.
Challenges—and Solutions—When Natural Disaster Strikes
Here are the key financial threats common after a natural disaster, how to avoid them, and how to overcome them once the dust settles:
Lost Documents and Cards
The idea, of course, is to keep critical financial documents such as mortgage documents stored safely away in a lockbox, vault or other secure spot. Fortunately, in the digital age, lost financial documents, bills and payment cards can be easily replaced. But the sooner you act to replace those items, the better.
"After first contacting their insurance company, homeowners and car owners with damage should also notify their lenders," advises Greg McBride, chief financial analyst at Bankrate.com. "Late fees are typically waived for those residing in areas impacted by a natural disaster, and in extreme cases monthly payments may be deferred for a period of time."
No Cash or Payment Options
When news of an imminent disaster rolls out, the best move is to get to the bank, draw some cash, and have plenty of provisions, especially dry foods, on hand. If you don't have time, such as in the case of an earthquake, you may be able to get needed cash after the event occurs. "Many banks and credit unions will set up mobile ‘branches' so affected consumers are able to access cash or easily apply for loans needed to repair damage," McBride says. Call your bank as soon as possible, and discuss your cash and payment options.
Insurance Claim Challenges
Document your expenses, urges Jon Ulin, managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida. "Save all your receipts if you can't live in your house and make sure to keep detailed records of all additional expenses," Ulin advises. "Some homeowners' policies may cover you for additional living expenses and provide advance payment options. Also, make sure to contact your agent as soon as possible to report your claim and update him or her with your temporary address." Take plenty of pictures of your property, too, Ulin says. Good images showing the severity of your problem can often "fast track" an insurance check.
If you have to hire contractors to repair damage to your home, assess them carefully before signing a contract. "Once you get your home damage appraised by your insurance adjuster and find out how much your insurance will pay for your repairs, take time to vet and hire contractors," Ulin says. "Get referrals and references while looking up each contractor's licenses and information online." Also, make sure to take your time signing any contracts, avoid paying large upfront costs, and beware of door-to-door solicitations.
Fraudsters on the Move
Sensitive data can easily fall into the wrong hands, and in the event of a disaster it can be difficult to control who may be able to access your personal financial files or data. Once you are able to, check your accounts for any signs of fraudulent activity. If you see any charges or other issues, contact your provider immediately and report it. If it appears your identity has been stolen, consider freezing your credit so scammers can't open any accounts in your name while you deal with the fallout from the disaster, and monitor your credit report for any unusual activity.
Dealing with a natural disaster is tough enough emotionally. That's why it's so important to protect your financial assets. Taking what actions you can before an event to ensure your finances will be safe is ideal, but know that your financial providers don't want to see your accounts in turmoil either—and most will do what they can to help you as you and your family put your life back together.