No matter what your religion is, you have probably heard the Bible verse, “Love thy neighbor as thyself.” Or what many refer to as the Golden Rule, which can be found in many religions. That’s exactly what happened in Houston, TX after Hurricane Harvey made landfall in 2017. Millions around the country showed up to help with relief efforts. With the amount of devastation, all these efforts were great. Sadly, Texans will be cleaning up long after the good samaritans that came to their aid are gone.
Major disasters leave in their wake more than just physical clean up. Financial reconditioning takes place as well. As a financial advisor in Knoxville, TN, I am obviously ready and up to the task of helping those dealing with financial displacement during Hurricane Harvey. However, even if you are not directly dealing with the devastation of this hurricane, you’ll want to take some financial steps to prepare for a storm… and your storm is coming.
The first order of business is making sure you have the proper insurance. Keep in mind that homeowners coverage typically does not cover floods, which is what most of Texas dealt with. You’ll need to have flood insurance for that. The National Flood Insurance Program provides basic coverage up to $250,000 for buildings and $100,000 for the contents. If you are a small business owner you can turn to the Small Business Administration for help. They offer low-interest loans in disaster areas. Simply fill out the application online.
Next, make sure you are able to get to liquid funds fast in the event of a disaster. A Home Equity Line of Credit (HELOC) is an excellent option for acquiring cash in the event of a catastrophe. Secure a HELOC long before a storm transpires though. Once you suffer damage to your home you will not be able to obtain one. It’s always a good “secondary insurance policy” in the event of a major disaster. More than likely it will be awhile before you ever see funds from the actual insurance company.
Borrowing from your retirement or a cash value life insurance policy may be another option to getting your hands on cash fast as well. Or GoFundMe accounts can help pull in some money to cover initial displacement and rebuilding costs if you experience a disaster. Always keep records of any costs related to the storm damage. These are good for claiming casualty losses on your tax return. These deductions will help if you end up taking a premature distribution from your retirement plan. Typically, the casualty losses offset the taxes from the distribution. Congress also occasionally enacts legislation allowing those early withdrawals without the penalty for those affected by major disasters.
Obviously, if you ended up sustaining damage, the first place to start is by taking pictures. Make a list detailing what was lost as soon as possible. You may need to make minor repairs such as patching a roof; however, insurance adjusters will need to see the extent of the damage. Keep any receipts for purchases made for replacement housing or food. You may even want to hold on to receipts for transportation or storage expenses you might have incurred. Sometimes insurance companies will advance those up front. And while it may be awhile before insurance companies get to you, file your claim as quickly as possible. Don’t forget to file with FEMA or anyone else that is helping with relief too.
While no one ever wants to face a disaster, being prepared in the event of one will make your recovery quicker and a lot less painful.