What you can do before (and after) a crisis to protect yourself.
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By Morningstar.com | 11-06-12 | 06:00 AM | Email Article

As residents of areas affected by Hurricane Sandy found out last week, a natural disaster can bring about not only emotional hardship, but financial hardship, as well. From keeping important documents safe and accessible to having enough cash on-hand to get by until things return to normal, being prepared for a disaster is an important part of protecting your home and your family.

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It could be a natural disaster like a hurricane, tornado, flood, fire, mudslide, or earthquake. Or it could be something on a more limited scale like a power outage. Whatever the crisis, taking the steps below will help you better handle whatever might come your way.

What You Can Do Now
Probably the most important thing you can do is to get yourself organized before a disaster strikes. Chances are that's not at the top of your To-Do list for the weekend, so it's very easy to procrastinate. But think of it this way: You buy insurance to protect you from catastrophes; disaster preparedness is just another kind of insurance that you prepare yourself. It doesn't have to cost a lot, but it could really save time and added frustration should something happen to you. Once you've got a plan, you only need to update it periodically.

There are good websites to help you protect your property, but you might need to gather your most important papers quickly. Do you know where they are? Here are some of the documents to which you may need access:

  • Checkbooks
  • Investment account numbers, passwords, and phone numbers
  • Insurance policies
  • Social Security card
  • Medical records
  • Retirement account information
  • Estate documents
  • Cash to cover one to two weeks' emergency expenses
  • Home inventory record (you can buy inexpensive software to prepare this electronically)

You might also want to have a list of key contacts/phone numbers, which may include the following:

  • Family cell-phone numbers and email addresses
  • Police, fire, and ambulance phone numbers
  • Red Cross local phone number
  • Local emergency response center phone number
  • Your company's human resources department phone number

Keep these important papers in a plastic bag in your home safe or safe deposit box so that you can grab them quickly if you need to leave your home in a hurry.

What to Do if Disaster Strikes
If you find yourself in any sort of emergency situation, your first step is restoring household stability. If your house has been damaged, you may need emergency shelter. The Red Cross or your local emergency response center should be able to help. If your area has been declared a federal disaster area, you may qualify for financial relief. Your property insurance agent can help you file a claim on your homeowners or other types of insurance policies.

If you have been injured, you might need to file for disability benefits. If you have this type of coverage through your employer, give your company's human resources representative a call. If you have coverage outside of your company, call the insurance company to file a claim.

If you are healthy but a family member needs your care, you may be able to take as many as 12 weeks of unpaid leave under the Family and Medical Leave Act without losing your job. To find out more, contact the U.S. Department of Labor via phone at 866-487-2365 or online.

What to Do if Someone Dies
When you're in a state of shock, it's very difficult to think of everything you need to do. So ask for help from a family member, a friend, or an advisor. Here are some of the things you'll need to do:

  • Gather important documents
    o Wills and trusts
    o Insurance policies
    o Death certificates (10 to 25 copies)
    o Social Security numbers
    o Marriage license
    o Birth certificates for children
    o Financial statements for IRAs, bank accounts, brokerage accounts, company retirement plans
    o Company benefits booklet
    o Military discharge papers
  • Collect life insurance benefits
  • Contact deceased's employer
  • Keep sufficient cash on hand to pay immediate bills
  • Apply for Social Security and other death benefits
  • Contact an attorney to settle the estate

For more information, read "A Checklist for Surviving Spouses".

Required Reading
You can find additional information about recovering financially from a disaster here. Also, the American Institute of Certified Public Accountants and the National Endowment for Financial Education have put together a booklet on the subject that you can order for $10 here.

A version of this article appeared Sept. 8, 2005.

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