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Create Your Financial Disaster Recovery Plan

Updated: Apr 24

Home office desk with computer screen showing financial table, white coffee cup with Mutual Assurance logo on it, assorted papers, and a window in the background overlooking a backyard

2023 saw a record 28 catastrophes across the U.S., with 17 severe hailstorms or weather events, four major floods, two tornado outbreaks, two tropical cyclones, one wildfire, one heat wave and drought, and one cold wave and winter storm. Damages added up to $92.9 billion and counting.

A recent study by Bankrate reported that 57% of U.S. adults surveyed said they had incurred costs due to an extreme weather event over the past ten years.

Virginia homeowners are not immune to severe weather or climate events, so preparing for the inevitable is one of the best ways to help mitigate losses and hasten recovery.

We’ve all read about having emergency kits and to-go bags ready in case evacuation is needed in advance of a severe storm, and we know the importance of having insurance information plugged into our phones so we have it available if needed. But what about your finances? Are they in good shape to weather a storm?


The Immediate Aftermath

"Disrupted” is how most people would describe their lives following a disaster. The physical and emotional toll is significant, and navigating uncharted waters through inventorying the loss, normalizing routines for children, making sure the medical needs of seniors are met, being able to continue working remotely, securing shelter and basic needs, and more can overwhelm even the most organized person.

Financial preparedness, however, can be handled ahead of a disaster, giving you the peace of mind that unexpected expenses and even routine expenses are covered.

Here are three ways you can make financial recovery easier.

Make Sure Your Credit Score is in Good Shape

Credit cards will probably be your primary payment method after a natural disaster, so start building your credit score now so you will have access to better credit cards and personal loans if you need them.

In the event your credit takes a hit following a natural disaster, look for a credit counselor with disaster recovery experience now so you’ll have that contact information handy.

You can start by looking into Money Management International (MMI), a nonprofit organization that helps people struggling financially after a natural disaster. It provides free resources, counseling, and assistance through a program called Project Porchlight.

MMI says the average consumer loses close to 25 points on their credit score following a natural disaster, but after working with financial counselors, those 25 points are recovered in about two years.

Secure an Emergency Credit Card

Many people will have a credit card they use for emergencies in addition to the card they use for daily needs. This “emergency” card will need to be used from time to time so they are not canceled for inactivity, so you could use it to purchase items for your “Go Bag” or to replenish bottled water and non-perishable goods you’d need in an emergency.

With a second card, you will have access to credit without the hassle of having to secure one during an emergency when the physical and emotional stress is elevated, and the pressure to get anything could cause you to accept terms that aren’t best for you.

Whether you get another card or plan to rely on the one you have, check with the issuer to see if they have a hardship or forbearance program you can opt into if needed. Carefully review the terms of these programs, however, as they may not be suitable for your particular situation.

Lastly, make sure any card you get for emergencies is a no annual fee card. Some cards will charge you an annual fee if you don’t use it as often as they’d like, so be sure to clarify these terms before signing up.

Build An Emergency Fund

We’ve all heard the advice that you should have three months’ worth of expenses saved in case you lose your job.

The same concept applies for emergency planning. Whether you are rebuilding following a natural disaster or have a medical emergency to cover, you are better off planning ahead.

If you’d like an amount to shoot for, start with your insurance deductibles, gasoline for your car for a month, and the money you’ll need to eat out more frequently if you won’t be in your home.

Clarify Your Insurance Coverage

With a Mutual Assurance policy, you know your home and personal property are insured for replacement costs. Still, you will need to have some information put away in a safe place (in the cloud, in a bank box, etc.), such as your home inventory, assessed values, purchase prices, receipts, model numbers, product age, etc.), so you can support your claim.

With any insurance provider, clearly understand what types of endorsements and exclusions are part of your policy. If you have bare-bones coverage, your recovery may be more difficult.

Also, if you have to make emergency repairs on your property before an insurance adjuster arrives, keep those receipts as they may qualify for reimbursement. This, too, is something you should discuss with your provider before an event.

It is always a good idea to do an annual review of your personal property with your insurance provider, particularly if you’ve made any purchases of bigger ticket items like appliances, TVs, electronics, etc.

Store Your Financial Documents Somewhere Safe

You can make digital copies of your records and put them in the cloud or on a USB drive in a safe deposit box. You can put the original hard copies in a fireproof lockbox and/or send copies to a trusted family member or friend who does not live in your immediate area.

The documents you’ll want to save copies of include deeds, auto registrations, insurance policies (health, home, life), passports, Social Security Cards, Birth Certificates, drivers’ licenses, POAs, DNRs, account numbers from banking institutions, spare blank checks, credit card numbers (number, expiration date, and security code), phone numbers for important contacts, and if not already with an attorney, your will.

Automate Your Payments

If power is knocked out or you don’t have access to a computer, the last thing you’ll want is to learn that your insurance or car payment was not processed. Put as many of your monthly and quarterly payments on automatic payment as possible so you won’t have to worry about missing one.

Getting Help

Financial recovery is a complicated process full of red tape. The program mentioned earlier, Project Porchlight, is a free service to help you navigate the ins and outs of your financial recovery needs. Another option is Operation Hope, which can assist individuals and businesses.

If you think you may want to apply for FEMA or state assistance, reach out now to secure the forms you’ll need and have them completed as much as possible to help speed things up. You can keep these with your other protected documents.

Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” Knowing you are financially prepared will help make the physical and emotional recovery following a natural disaster easier.



Sources: Bankrate, MSN



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