The Responsible Investor
Four Tips to Prepare for Natural Disaster
In the fall of 2024, Hurricane Helene moved inland from the Gulf of Mexico as a tropical storm from Georgia to the mountains of North Carolina. In western North Carolina, the thousand-year storm caused immense damage from flooding. Even as Floridians were catching their breath, Hurricane Milton swept through shortly after. People living in areas thousands of feet in elevation and hundreds of miles from the coast were hit hard—so much heartache for so many people.
If you or your loved ones have been impacted, our hearts go out to you. Patterns of extreme weather may or may not be the new norm. It’s hard to say. Either way, life on planet Earth has long been fraught with dangers. If not hurricanes, other disasters such as tornadoes, floods or earthquakes could hit depending on where you live in the world. In the future, there may be new, formidable risks to manage. But, the truth is, risk itself is nothing new.
Some investors are interested in trying to align their portfolios with their values to achieve goals—such as lower carbon emissions—that could potentially reduce the risk of extreme weather in the future. NASA says “as carbon dioxide, methane, and other gases increase, they act as a blanket, trapping heat and warming the planet. In response, Earth’s air and ocean temperatures warm. This warming affects the water cycle, shifts weather patterns, and melts land ice — all impacts that can make extreme weather worse (https://science.nasa.gov/climate-change/extreme-weather/).”
However, to mitigate the risks, all investors should prepare their financial affairs for disaster. A few ounces of these preventive measures may forestall pounds of future strife.
1. Organize Your Financial Information
Access to financial information can be critical after a disaster, helping you work with your insurance companies, apply for disaster relief or even just keep up with your everyday bills.
Store important documents in a waterproof safe, a safety deposit box, or in the cloud for easy access during a disaster. Incidentally, make sure you aren’t the only person who knows where the information is.
Ensure you have access to the following:
- Tax statements, which you’ll need to apply for FEMA disaster assistance
- Insurance policies
- Proof of income, such as pay stubs
- Housing payments
For a more detailed list, check out the financial preparedness checklists available from FEMA.
2. Have Cash on Hand for a Crisis
If you don’t already have an emergency savings account, consider starting one you can tap in a crisis. Aim to save three to six months’ worth of expenses. But also take note that in a disaster, it may be difficult—or even impossible—to take a quick trip to the bank. So, keep a small amount of cash on hand in case credit cards and local ATMs don’t work in an emergency and you need to buy food, fuel or other supplies.
3. Have the Right Insurance
Make sure you have appropriate homeowners or renters' insurance.
A homeowner’s policy generally covers your dwelling and other structures, personal property, personal liability and medical protection. It also typically offers loss-of-use compensation if you need to relocate temporarily. Renters insurance should provide roughly the same coverage except for protection for structures, which is a landlord’s responsibility.
If you are a business owner, make sure to have business insurance to protect your business property and employees.
Importantly, neither homeowners nor business insurance cover flooding or earthquakes. If either are a possibility in your area, considering purchasing separate policies to cover each if such policies are available. In some particularly risky areas, earthquake and flood damage coverage may be cost-prohibitive or otherwise unavailable.
4. Inventory Your Property
Maintain a detailed inventory of your house to help you prove the value of items you own that may be lost or damaged during a disaster. An up-to-date inventory can help you determine how much insurance to purchase, and it can speed the insurance claim process. It can also provide documentation needed to deduct losses on your tax return.
Take photos or videos to help you record your belongings and where appropriate, write down descriptions. For higher-priced items, add as much detail as you can. For instance, instead of simply listing “camera,” note the specific model number and the year you bought it. Also consider having especially valuable items appraised. There are often local services that can help you create audiovisual inventories or even apps that can help keep you organized. Store your inventory and appraisal documents with your other important financial documents.
What To do After a Disaster
If disaster strikes, consider taking a bit of time to yourself before springing into action, if that’s possible. Grieving the losses you’ve endured is an important step in the recovery process, and acknowledging your emotions may take precedence over the financial harm done.
Once you’re ready, contact your insurance company to report the damage. Document and prepare a list of damaged items, and keep the items, if possible, until a claims adjuster has visited.
You’ll also want to hang on to receipts for expenses you incur, such as supplies, repairs and lodging if you can’t stay in your home. These expenses may be covered by insurance.
If you can’t stay at home, notify your utility providers and have them pause or discontinue services. You’ll still be on the hook to pay certain bills after a disaster. Prioritize paying your insurance premium and mortgage, which you must pay even if your house is damaged. If it becomes difficult to pay debts, including your credit card bill, contact your creditor who may be willing to work with you on a payment plan.
No one expects to be on the receiving end of life-changing disaster. But being prepared can help ensure you can pick up the pieces faster.
Learn more about Derek Van Calligan
Hello! I’m Derek, a wealth advisor and director of investment research at Allodium Investment Consultants, located in Minneapolis, MN. I am passionate about helping individuals and families build holistic financial plans to help them reach their goals. When I’m not helping our clients make investment decisions, I enjoy spending time in the mountains in Colorado—skiing, fishing and hunting with my wife, Kelly, and my dog, Hank. I am also an active church member and volunteer at Big Brothers Big Sisters and Junior Achievement.
The information provided is for educational purposes only and is not intended to be, and should not be construed as, investment, legal or tax advice. Allodium makes no warranties with regard to the information or results obtained by its use and disclaim any liability arising out of your use of or reliance on the information. It should not be construed as an offer, solicitation or recommendation to make an investment. The information is subject to change and, although based upon information that Allodium considers reliable, is not guaranteed as to accuracy or completeness. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.