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Preparation Can Make All the Difference Between Inconvenience and Disaster

Natural or manmade disasters can strike at any time, and protecting your family’s health and security are the most urgent considerations. However, the steps you take before a disaster strikes may make the difference between dealing with an inconvenience or trying to survive a nightmare.

"If you want to be prepared to deal with these kinds of disasters, there are two critical things you have to address," says Anthony F. Bruce, CPA, of Cherry Hill. "First, you have to be sure you have the proper insurances in place.” And before you simply say "yes," we have this or that insurance, Bruce recommends checking your coverage and replacement costs regularly. If disaster strikes, you do not want to be surprised to find you are badly under-insured.

If you are a renter, consider purchasing renter's insurance, Bruce adds. Replacing your belongings in an apartment may cost $50,000 or more. Renter's insurance is a relatively inexpensive way to protect yourself.

"Second, but equally important, you need to have cash to cover six months of your ordinary expenses – mortgage, food, clothing and so on," Bruce cautions.

The New Jersey Society of Certified Public Accountants (NJSCPA) advises that proper planning and preparation before disaster strikes is crucial and offers the following tips:

Keep Your Records in Order
In the wake of a disaster, documentation, including personal identification, insurance papers and banking and investment information may be necessary. CPAs recommend that you keep these important materials in a bank safe deposit box or a secure, fireproof home safe. Documents to store include birth, death and marriage certificates; divorce and custody agreements; passports; military records; copies of drivers’ licenses; deeds and contracts to real property; and stock and bond certificates. Other important papers include those with information and contact details for your insurance policies, as well as retirement plan beneficiary information. You’ll also want easy access to information on checking, savings and investment accounts; car titles; copies of wills, living wills or medical powers of attorney; and trust documents. Consider storing copies of some documents with a trusted relative or friend who lives in another location. That’s added protection in case you are unable to gain access to your home safe or local bank after a disaster.

When storing a will, remember that the original is necessary in the event of your death. Since a bank safe deposit box may be sealed after a death, do not store the original there. Instead, keep the original at your lawyer’s office or other secure and accessible location.

Take Pictures
Among your records, remember to store photos of your home and what’s inside, including the contents of closets, garages, attics and basements. Photograph your cars, as well and any other belongings that could be damaged in a disaster. It’s also a good idea to make an inventory of your possessions, along with your best estimates of what it would cost to replace them. The photos and inventory will come in handy when you make an insurance claim for lost possessions.

Have Some Cash on Hand
If the power goes out in your area, banks or ATMs might be unavailable. It’s a good idea to always have enough cash on hand to cover your family’s expenses for at least five days. Keep this money in a safe location where it can be easily accessed.

Use Free Resources
There’s a great deal you can do – both before and after a disaster strikes – to get you back on your financial feet quickly. The NJSCPA offers a free Disaster Recovery Guide, available online at www.njscpa.org/recovery, designed to assist with many of the details involved in the recovery process, including documenting losses for tax and insurance purposes and replacing personal identification papers. For more guidelines, check out Financial Planning: A Guide for Financial Preparedness, a booklet offered by the American Red Cross, the American Institute of CPAs and other sponsors. You can search for it on www.aicpa.org.

Talk to Your CPA
Your CPA has expertise in a wide range of financial matters, including preparing for or recovering from unexpected events. Contact him or her for advice on all your financial needs.

If you would like to receive more information on various financial matters, subscribe to E-CPA, the NJSCPA's free, monthly email newsletter. To subscribe, visit www.njscpa.org/finances or email a subscription request to e-cpa@njscpa.org.