Family Financial Emergency Preparedness and Recovery Guide for Natural Disasters

Natural disasters can be crippling — both for individuals and for the world as a whole. According to the National Centers for Environmental Information, there have been 273 weather and climate disasters since 1980 that have reached or exceeded $1 billion in damages. Moreover, since July 2020, there have been 10 weather and climate disasters, the damages of which exceeded $1 billion in the United States alone.

To mitigate the financial impact of natural disasters, it is important for individuals and organizations to be aware of the ways that they can prepare themselves for, and recover from, natural disasters.

Create an Emergency Fund

Since natural disasters can be costly, and insurance doesn’t always cover the cost of everything, you want to be sure to prioritize creating an emergency fund. This money should be set aside and left alone in case of an emergency. The amount you decide to put aside is ultimately up to you, but many financial advisors suggest that you should aim to put away three to six months’ worth of living expenses.

The amount you put in an emergency fund should vary depending on the number of individuals who need to be monetarily covered. If you are only responsible for yourself and your significant other, you could get away with a smaller emergency fund (multiply three to six months’ living expenses by two).

But if you are responsible for a family of six, you may want to consider putting more aside. The dollar amount should factor in rent/mortgage, utilities, insurance, cell phone bills, food, and any other specific monetary agreements that you need to consider (e.g. student loans, car payment, health insurance).

It should also be noted that if you are in a large amount of debt, you shouldn’t try to allocate all of your excess money into an emergency fund unless you live in an area that is notorious for natural disasters. Put $1,000 or so aside, and work on getting out of debt before you allocate large sums of money towards your emergency fund.

Create an Emergency First Aid Kit

Natural disasters are unpredictable and there are chances that you can be hurt without an opportunity to go to a hospital. You want to be sure that you have a viable, fully-stocked emergency first aid kit that considers all of the different risks behind natural disasters. The American Red Cross recommends the following for what to put in an emergency first aid kit:

Two absorbent compress dressings (five-by-nine inches);
25 adhesive bandages (assorted sizes);
One adhesive cloth tape (10 yards by one inch);
Five antibiotic ointment packets (approximately one gram);
Five antiseptic wipe packets;
Two packets of aspirin (81 mg. each);
One emergency blanket;
One breathing barrier (with one-way valve);
One instant cold compress;
Two pair of nonlatex gloves (size: large);
Two hydrocortisone ointment packets (approximately one gram each);
One three-inch gauze roll (roller) bandage;
One roller bandage (four inches wide);
Five three-inch by three-inch sterile gauze pads;
Five sterile gauze pads (four-by-four inches);
Oral thermometer (non-mercury/non-glass);
Two triangular bandages;
Tweezers;
Emergency First Aid guide.

The recommendations above are for a family of four. The contents of your first aid kit — specifically the number of materials necessary — should vary depending on the size of your family. It is always better to have excess materials than not enough.

Create an Emergency Financial First Aid Toolkit

There are certain documents you need in case of an emergency, and ultimately you’ll want to avoid having to replace them after a natural disaster. In 2004, the Federal Emergency Management Agency (FEMA) and Operation Hope teamed up to create the Emergency Financial First Aid Kit (EFFAK).

The intent behind the EFFAK was to help individuals and families build financial preparedness for all types of emergencies, not just natural disasters. The EFFAK can be broken down into four primary categories:

1. Household Identification

You’ll need to be able to prove the identity of all household members after a disaster if any documents are lost, maintain or re-establish contact with your family or other household members, maintain contact with your employer or the employers of other household members, and apply for FEMA disaster assistance.

Your household ID folder should include the following documents (if applicable):

Driver’s licenses;
Additional photo IDs;
Birth certificates;
Adoption/custody documentation;
Marriage license;
Divorce decree;
Child identity cards;
Passport(s);
Green card(s);
Naturalization documents;
Military ID;
Military discharge record;
Pet ID tag(s);
Proof of pet ownership;
Microchip information;
Emotional support documentation;
Service animal certification.

2. Financial and Legal Documentation

You’ll need to be able to identify your financial records/responsibilities, reestablish your financial accounts, maintain payments, maintain credit, contact companies or individuals who can help you financially recover, and apply for FEMA disaster assistance.

Your financial and legal documentation packet should include the following documents (if applicable):

Lease/rental agreement;
Mortgage(s)/deed(s) of trust;
Home equity line of credit;
Utility bills;
Loan payments (car, student, boat, etc.);
Credit card documentation;
Alimony documentation;
Child support documentation;
Elder care documentation;
Automatic payments/deposit documentation;
Banking establishment statements;
Retirement account(s) documentation;
Investment accounts;
Vehicle registration;
Insurance documentation (life, car, natural disaster, pet);
Appraisals;
Pay stubs;
Government benefits (Social Security, veterans benefits);
Rewards account information;
Tax documentation (W2, tax returns, property tax statement);
Will/Trust;
Power of attorney.

3. Medical Information

You’ll need to ensure that past medical information is kept safe for future health and medical needs for your household. Your medical info packet should include the following documents (if applicable):

Physician contact;
Pediatrician contact;
Medical specialist contact;
Health insurance ID card;
Pharmacy ID card;
Medicare card;
Medicaid card;
Record of immunizations/allergies;
Caregiver agreement;
Medication list;
Medical equipment documentation;
Disability documentation;
Living will/power of attorney;
Veterinarian contact;
Pet immunization records;
Pet insurance documentation;
Pet medication list.

4. Household Contacts

Aim for flawless communication between your family, financial advisors, health professionals, and any other service providers. Your household contacts file should include the following information (if applicable):

Landlord or mortgage representative;
Doctor, dentist, or other health care provider;
Insurance agent;
Person in charge of your military benefits;
Social services representative;
Aid to family programs, Supplemental Security Income, and Social Security Disability Insurance;
Local disability service provider or case manager;
Assistive technology or durable medical equipment provider;
Lawyer;
Financial advisor;
Banking institution(s);
Neighborhood, civic, and house of worship contacts.

Create a Family Emergency Plan

Once you have gathered all the necessary documents, created an emergency fund, and created an emergency first aid kit, you need to come up with a family emergency plan. A family emergency plan should be a list of steps to take in case of an emergency. The following information should be considered and included within your family emergency plan:

Phone numbers: Make sure to include the numbers for the police station, fire station, school, employers, child-care, poison control, as well as the numbers of family members — this should include both parent’s phone numbers and the numbers of any siblings with phones. You should also include an emergency contact (or two) for your family to contact in the worst-case scenario;
Escape routes: Create viable escape routes based on your house layout. You should also consider how your escape routes may vary depending on the natural disaster (e.g. flood vs. fire). Drawing a map, or showing your family on a blueprint are both great methods for planning and explaining escape routes;
Pet plans: If you have pets, you want to have a plan in place for how you are going to make sure your pet remains safe during a natural disaster. This is not only true because of the Pet Evacuation and Transportation Standards Act (PETS Act), but also because many pets who are abandoned do not make it. Create a plan for your pet that ensures their safety;
Meeting spots: Create meeting spots outside of your home in case the home is affected by the natural disaster. Similar to escape routes, the specifics of the meeting spot(s) should differ depending on the type of natural disaster. Make sure to communicate clearly what your different meeting spots are and assess how viable your meeting spots are as time goes on.

You also want to constantly reassess your family emergency plan to cover any gaps you may have forgotten. It is important to create different emergency plans for different natural disasters. For example, if the house is flooding, the basement should not be used as a meeting spot, but if there is an earthquake the basement could be the most viable meeting spot.

When there is an emergency, you may not have any time to communicate with your loved ones, and it can be hard to remember all the parameters during a natural disaster. It is important to write the emergency plan out and go over it with your family on a regular basis. Practice your emergency plan to really see where there are gaps within your plan to improve upon.

Preparing Your Home for a Natural Disaster

You want to ensure that your home is well-equipped for natural disasters. You should consider all the types of natural disasters, but if you are in an area that is more at risk for specific natural disasters, you should aim to prepare your home based on the natural disasters your home is most at risk for. Use the following tips for preparing your home for a natural disaster:

Locate utility shut-offs: During natural disasters, local officials may urge you to turn off your water, gas, or electricity. Although many homeowners find these immediately, if you do not know where they are, you should locate them;
Prepare windows and doors: During a hurricane or tornado, your windows and doors can be dangerous areas in the case of glass shattering. While most areas prone to hurricanes and tornadoes will recommend shutters on your home, there are shutter alternatives for reinforcing windows and doors;
Take care of outdoor items: Your outdoor items (e.g. portable storage, patio furniture, lawnmower should either be brought into your home or secured outside if you cannot bring the item into your home. Use ropes or straps to help secure items;
Turn up refrigerator and freezer: The power going out is common during natural disasters, so if you are preparing for one, you should turn your refrigerator and freezer to the coldest setting to ensure that your food stays cold as long as possible. If your food reaches the “danger zone”, it is no longer viable for consumption;
Unplug electric appliances: If the power is out, you should immediately try to unplug your various electric appliances. If you do not have a surge protector, you are at risk for potential damage once the power is returned;
Move belongings upstairs: If there is a flood coming, you should move your belongings upstairs if time is permitting. While this does not guarantee your belongings are safe, your items have a better chance than they would in the basement or first floor of your home;
Fill up gas: In an emergency, power can be down, and it can be difficult to get access to gasoline. Be sure to fill up your cars, as well as gas canisters when you are preparing for a storm. If you have generators, make sure to fill them up, and refill your gas cans for back up;
Create a safe room: In some cases, you may not have enough time to evacuate during a natural disaster, and you could benefit greatly from a safe room. Safe rooms are freestanding structures designed to withstand the impact of falling debris and other elements of natural disasters. They are typically made from reinforced concrete, steel, wood, and fiberglass. It is also important to create your safe room on the basement floor, or the first floor if you do not have a basement.

Insurance Coverage

The best way to protect your home from a natural disaster is to make sure you have proper insurance coverage. While many assume so, some natural disasters are not always covered in homeowners’ insurance policies. In most cases, you need to get additional coverage.

When you are shopping for homeowners insurance, make sure you are keenly aware of what it covers, and what it does not. Generally, homeowners insurance covers fire and wind damage, nothing else. If you live in a town prone to specific natural disasters like hurricanes, floods, or earthquakes, it is crucial to seek out additional coverage to offset the risk of living in that area.

Recovering from a Natural Disaster

There are many different moving parts to recovering financially from a natural disaster. Recovery can seem exceedingly overwhelming if you are unaware of the various resources available. Even if you are well-prepared in every way prior to the natural disaster, it is important to note that recovery takes time and it takes effort.

Insurance Claims

If you, your business, or your home have suffered loss as a result of a natural disaster, be sure to call your insurance agent immediately. The first thing you will want to do is file an insurance claim. You will need to check with your insurance agent for insight into what documentation you will need, the timeframe for claim resolution, and the different details to include in your claim.

You should take pictures of the damage immediately, and be sure to keep copies of all of the documentation throughout the whole process. In some cases, you may want to contact local law enforcement. An official police report can be one of the best ways to capture exactly what happened for a more smooth insurance claim process.

After you file your claim, you need to wait for the next steps. You can always make repairs on your own and keep track of the costs, but insurance doesn’t always cover everything. If you choose to take this route, you potentially may just have to foot some or all of the bill.

Government Resources

There are disaster financial assistance resources from the government available. The intent behind each resource varies, from providing home improvement loans, to providing insurance. Below is a list of government resources for mitigating the effects of natural disasters:

Federal Emergency Management Agency (FEMA): Aims to help individuals and businesses before, during, and after natural disasters;
Ready: Created in 2003, Ready promotes education and preparedness for natural disasters;
FloodSmart: Focuses on providing flood insurance as well as explaining the risks of floods, and the necessity of coverage;
National Resource Network: Designed to empower local government to tackle difficult issues such as natural disasters and economic crashes.

Additional Resources

There are a variety of additional resources that aim to help with an array of issues stemming from natural disasters.

Preventing Fraud

The National Insurance Crime Bureau explains how disasters result in fertile ground for fraud — especially contractor fraud. When individuals go through a natural disaster, they can become more susceptible to fraud because the parameters of what to do after a natural disaster are not well known. Use the following tips for preventing fraud before, during, and after natural disasters:

Know who you are dealing with. Check with the Better Business Bureau (BBB) for credibility;
Avoid unsafe/unsecured payments;
Protect your personal information;
Avoid unsolicited emails;
Be wary of high-pressure purchase situations;
Check your credit report regularly;
Ask questions to fully understand offerings.

Most fraud revolves around credit cards, and although there is a hefty punishment for credit card fraud, many are willing to take the risk. Remember the tips above if you find yourself in a situation that raises some red flags.

Managing Debt and Credit

Managing your finances and repairing your credit during an emergency can seem like the least of your worries, but they should be prioritized. Debt and credit will affect your credit score, and if you let your credit score slip, you may not qualify for loans or financing to cover the various costs of natural disasters.

The best way to manage debt and credit is to speak with your creditors. More often than not, creditors are willing to work with those who are actively trying to come up with a plan that will work for both parties involved. If you are unable to pay your bill, ask for a grace period, or look into forbearance or deferment options.

It is important to take action, and not wait for creditors to reach out to you because you may be sent to collections, and getting sent to collections can hurt your credit score. Be proactive with managing your debt and credit before, during, and after a disaster.

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