Documents you Need When Disaster Strikes
May 13, 2010 9:08 AM EDT
When fire roared through Adelaide Zindler's San Diego neighborhood in the middle of the night, her first thought was to alert an elderly neighbor. The last thing on her mind was the whereabouts of financial records stored in her home.
"I was thinking family and I was thinking friends and I was thinking safety," Zindler says.
Uprooted from home for days, and unsure where other relatives were, she and her husband needed a month or two "before we got to a place where we were thinking about paperwork again," she says.
By that point, they were late on their mortgage payment. The financial institution was unforgiving, and the couple's credit score took a hit.
The Zindler's money woes mirror those of others whose lives are abruptly turned upside down because of a disaster. But it doesn't have to be that way.
Financial advisers say people who identify and prepare key documents long before calamity strikes can avoid unnecessary damage to their personal finances in the wake of a fire, flood, hurricane or other disaster.
What you need
All homeowners and renters should have a list of "must haves" and "like to haves" -- items they will need, or want, after a disaster, says Mitchell Freedman, founder of MFAC Financial Advisors in Westlake Village, Calif., and an editor of theAmerican Red Cross' "Disaster Recovery: A Guide to Financial Issues."
Key documents to have at hand include:
Mortgage documents or rental agreements.
Homeowners, renters and automobile insurance policies.
Financial statements and account numbers.
Copies of prescriptions for medications.
Freedman also suggests having a small stash of cash at hand. If the electricity is out, credit cards won't work for purchases.
Donna Childs, a former reinsurance industry executive, was living within sight of the World Trade Center when the towers collapsed Sept. 11, 2001. Hers was the only residential neighborhood evacuated, and she was kept out of her home for a couple of months.
Because of her business background, Childs already had all her personal and business documents scanned in and stored online remotely when she had to flee with just an overnight bag.
At a time like that, "you shouldn't be thinking about documents, you should be thinking about safety," says Childs, who later wrote the book "Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses."
Neither Freedman nor Childs are fans of using bank safety-deposit boxes to store key documents. They suggest that a bank could be destroyed or inaccessible after a disaster.
Instead, Freedman uses a portable hard drive with his computer so he can grab it and go.
"It's one of the best insurance policies you'll ever have," he says.
Childs prefers remote online storage, and recommends sharing the password with a trusted family member or friend who can access the account in case of an emergency.
Some banks now offer online safety-deposit boxes that can protect documents, photos and videos.
In addition to having access to key documents, it's important to have proof of your valuables when filing insurance claims.
Michael McRaith, chair of the Illinois Department of Insurance and active in the National Association of Insurance Commissioners, says individuals should go room by room through their homes, writing down the contents and making special note of things like antiques, jewelry and collectibles.
He recommends keeping one copy of the inventory at home and a second at another location, such as with a relative, at the office or in a safety-deposit box. The list should be updated periodically, with receipts kept for big-ticket items.
Having photographs or videos of your possessions is crucial, Freedman says. Without it, "it's difficult to know how many shirts you had, how many pair of pantyhose a woman had."
If someone needs to file a claim after a disaster, the inventory, receipts, photos or videos help verify their existence and value, and ensure no one makes a $1,000 claim for something really worth $100, McRaith says.
Those who have no insurance or are under insured can record a loss on their state and federal income tax forms. Having documentation of their possessions helps provide the proof they need, Freedman says.
But the key is advance preparation. By doing so, "there's lots of peace of mind," Childs says. "That's really priceless."