After Disaster Strikes From Bankrate.com

As floods and tornadoes exact a toll on lives and property across the United States, many people realize they aren't financially prepared for a natural disaster. But these catastrophes don't have to leave your life in financial ruins. You have plenty of worries -- it's unfortunate that money is one of them, but Bankrate.com has tips to help you get your finances organized after chaos strikes.

Track these throughout the year. . .
Dealing with a disaster's aftermath
Plus: These agencies help homeowners cope with disasters
Protect your finances after a disaster
Let the IRS help after disaster strikes
Power's out. Now what?
Plus: The cost of a portable generator
You have homeowners insurance. But are you really protected?
Understanding flood insurance
The four phases of recovery from a natural disaster

As floods and tornadoes exact a toll on lives and property across the United States, many people realize they aren't financially prepared for a natural disaster. But these catastrophes don't have to leave your life in financial ruins. You have plenty of worries -- it's unfortunate that money is one of them, but Bankrate.com has tips to help you get your finances organized after chaos strikes. Dealing with a disaster and your insurance company, The disaster has passed, leaving behind a mess so complete it's hard to know where to begin putting things right.

Resist the temptation to run away and worry about it later. Your mission -- and you better accept it -- is to call your insurers and get the claim ball rolling. The sooner you report damage, the sooner you get to cash the check.

Here are 12 tips from insurance experts that will assist you in cleaning up the financial mess and getting on with life:

1. Call right away.Calling the insurance company will put the claim on record and also may get you some emergency help, such as a crew to help pump out a swamped basement following a hurricane or flood. You can contact your agent by phone or e-mail, but it is always a good idea to also mail a letter notifying the company and outlining the loss. Getting proof of delivery will let you off the hook if, for some reason, your report goes unrecorded and there is some question concerning timing of the claim.

2. Hunt down your insurance policies.Ideally, you would have collected these policies in a safe place beforehand. Now is time to get them out. This includes not just your homeowners, wind and flood policies, but also auto and even health insurance. You need them all because some policies may include overlapping coverage. Read the fine print of each carefully, especially the part in your homeowners policy entitled "Duties After a Loss."
Don't take the naive attitude that your insurance company will take care of everything.

"Even if you have a good, proactive company, you have obligations," says James Walsh, author of "Get Your Claim Paid."

And although it won't help with your current problems, now that you have all your policies in hand, when things settle down consider what revisions you might want -- or need -- to make in case there ever is a next time.

For example, can you get a more reasonable deductible? In at least 15 coastal states stretching from Maine to Texas, the hurricane-related wind damage deductible (especially on newer policies) probably isn't a flat amount. It usually equals 2 percent to 5 percent of your home's insured value, meaning that if you have a $200,000 policy, you'll have to cover as much as $10,000 in hurricane-related damage before your homeowners policy kicks in. Some companies will allow you to pay a higher premium to lower the percent or, in some cases, even get a flat dollar deductible. Some insurers even allow changes with as little as 24 hours notice. Call your agent and ask. The worst the company can say is no.

Another coverage worth adding if you don't already have it is sewer-backup insurance. While homeowners policies don't cover flooding (you have to buy federal flood insurance for that), sewer-backup insurance will cover damage caused by water that backs up, overloading the sewer system, your septic tank or your sump pump, and then flows into the house.

3. Check your property thoroughly as soon as possible.Inspect everything: basements, attics, backyard sheds. In particular, look carefully at the roof. Even if it looks solid, search for any evidence of leakage. Check the foundation for cracks or erosion, even if you don't have floodwater inside your house. Make sure that major systems like your furnace and air conditioner are working. Turn on all your appliances. Make a written list of any damage you find. It also is a good idea to corroborate any damages by taking photographs. If you have pre-damage pictures of your property and belongings, all the better. The before and after photographs can substantiate what property you lost or how strong a hit your home took.

4. Make temporary repairs.This will prevent further damage to your property. For instance, if a picture window is smashed, do what you can to cover the opening. "If an adjuster looks at your house and sees that you made a good effort to mitigate further damage, he or she is more likely to approve the claims you make," Walsh says. But stop short of removing evidence of the damage. If the insurance adjuster can't see what happened, he's unlikely to take your word that it did.

And as much as you'd like any help, don't accept the services of companies that drive through damaged neighborhoods immediately after a disaster and offer to help. While these services may seem tempting, Carolyn Gorman, vice president of the Insurance Information Institute, says catastrophes bring scam artists out of the woodwork. Plus, the services that many of these opportunistic companies offer, such as tree removal after tornadoes or hurricanes, are usually performed free of charge by Federal Emergency Management Association teams.

5. Be wary.Give your agent the phone numbers and addresses where you can be reached day or night. When an adjuster contacts you, ask for identification. Do not permit an adjuster to inspect your property without proper identification. Thieves have been known to use this ruse to get inside your home.

6. Be prepared.When the adjuster shows up, have available evidence of your loss, including itemized lists, appraisals, videos, still photos, receipts -- whatever you can muster to prove what you owned and what it's worth.

Dealing with your insurance company

7. Don't settle for less.It can be a blessing if your insurance company sets up an emergency claims office in the area and offers to settle partial claims on the spot. This is a practice of many large insurance companies experienced in disaster management. But don't jump at immediate relief. Occasionally, a less scrupulous insurer will try to slip in language on a small settlement that states the payment is a full satisfaction of the company's liability.
And be careful of anything you sign, warns Walsh.
"Under those circumstances, most major companies won't require that you sign anything other than endorsing the check," says Walsh.
Even before you do that, make sure that there isn't language on the back of the check that prevents you from making any further claims.

8. Don't take the first offer.You don't have to accept the first settlement your insurance company offers. If you don't think a settlement is enough, go back and look over your policy. Read the coverage limits for various types of structures and personal possessions and check how the insurance company is applying each type. Talk to the claims adjuster. If he doesn't provide satisfaction, go higher.
"If you're sure you're right, don't take no for an answer," says Gorman.
If all else fails, file a report with your state insurance department.
"In a disaster situation, no company wants the state insurance department breathing down its neck," says Gorman.

9. Consider the alternatives.It's possible that your policy limits you to rebuilding exactly the same house in the exactly the same place. Many policies don't. Consider whether you want to use this opportunity to move to a condominium or pick up stakes and sail around the world.

10. Get help.Filing any insurance claim generally is a do-it-yourself task. In most cases, that's not a problem -- as long as you are dealing with a reputable insurance company and you are reasonably assertive and willing to stay on top of the claim. But if you're unable to be near the property or the claim is complicated or you're not well, you might consider hiring a licensed public adjuster. For about 10 percent of the claim, they'll read over your policies, submit the paperwork and follow up on any problems.

11. Vet the repair services.Your insurance company may offer to wave a deductible if you're willing to work with a contractor it recommends. While this can be a good thing, Walsh warns that it can also lock you into hiring a company whose work doesn't meet your standards. Whether you go with the insurer's choice or find somebody on your own, don't be in such a rush that you neglect to check references or sign on the dotted line for work that you don't want. And if the insurance company is paying the repair company directly, don't sign anything that approves payment until the work is completed to your satisfaction.

12. Continue to be vigilant.Even after you've submitted a claim, stay on the lookout for damage that may take weeks to appear. Storms sometimes trigger things such as sinkholes and other earth movement that occur days or months later. And foundations of houses may shift or settle weeks after flooding. But don't let too much time pass. Find out your policy's time limit on making claims and meet that deadline.
After a disaster, help is available so your mortgage doesn't add to your woesBy Bankrate.com
Thanks to post-disaster programs, financial aid is available to help borrowers cope with tornadoes, hurricanes, earthquakes, floods or almost any other major disaster. It's affordable and doable to stay in a home -- without the overwhelming threat of foreclosure and loss.

Because disasters come with financial consequences as well as human costs, mortgage lenders, insurance companies, the Federal Emergency Management agency (FEMA) and the secondary marketing giants, Freddie Mac and Fannie Mae recognize they have to play a part in disaster recovery.

Each of these agencies have established different levels of aid and procedures to help victims get back on their feet.

For a homeowner, the relief can come in the form of mortgage payment assistance.
The available help comes in three major categories -- insurer-provided, government-provided and lender-provided. Borrowers should look at each as a line of defense, turning first to their insurance company and then FEMA for assistance. If neither can help or if they have special needs, consumers should look to either the mortgage lenders they originally dealt with or the current servicers to whom they send their payments.

How will each respond?Generally, insurers will cover the cost of replacing homes for borrowers who want to rebuild. The money can come from a homeowners policy, flood insurance, specialized coverage for events such as hurricanes or a combination of all of them.

People who don't own their homes completely will generally see their checks made out to both them and their mortgage companies. The lender holds the money in escrow and pays it out as the repair work takes place or after it's completed.

Emergency help during rebuildingIn the meantime, the borrower usually receives some kind of living assistance from the insurance company for a rental apartment or other temporary housing. As long as that's the case and the customer still has a source of income, the old mortgage typically remains in force and monthly payments will still be required.

Not everyone can make those payments, of course, because their employers might be wiped out, too. Some people don't have insurance to cover alternative living arrangements, either. For these consumers, FEMA offers several types of help. Its disaster helpline can be reached toll-free at (800) 525-0321.

"The interest of the programs is to make sure people have safe housing," says Karen Marsh, an emergency management specialist with FEMA's human services division. "There are various forms of assistance."

The government will reimburse homeowners for hotel costs should they be prevented from returning home, for example, or cover an apartment rental temporarily. FEMA can provide up to $25,000 for housing and other disaster-related needs.

Homeowners who don't have any income and are in so much trouble their banks have sent written notices of foreclosure may even have their mortgage obligations covered, courtesy of Uncle Sam.

"We would pay the full payment that is causing them to go into foreclosure -- whatever is necessary so that they would be out of the foreclosure proceedings," Marsh says. "It is an integral part of the housing program."

When necessary, negotiate with lenderBorrowers can try to keep things from going that far by negotiating with their lenders, especially when the same disaster affects everyone.
Remedies can range from a two- or three-month complete payment suspension to a temporary lowering of the amount due. In the latter case, the difference usually will be tacked on to future bills a hundred or two hundred dollars at a time.

While experts realize none of these measures can wipe away the pain of living in a tent city for weeks on end or watching the roof blow away shingle by shingle, they say the efforts can make recovery a little easier.

Protecting your finances after disaster strikes

If you find yourself facing cleanup after a hurricane or tornado has ripped through your neighborhood, the task can be truly daunting. Hopefully, all your preparations in the event of a disaster will come in handy for cleanup. Here are the essential steps to take to preserve your home, your bank accounts and sanity when cleaning up after a disaster.

1. Contact your insurance companyNotify your insurance company or agent as soon as possible after the storm to advise them of your loss and to let them know you will be making a claim. It's too early to make any specific dollar claims at this time. Your insurance company will assign an adjuster who will either be an insurance company employee or an independent adjuster hired by the company. The adjuster will advise you of the steps you need to take to file your claim and will provide you with any required forms.

2. Inventory your lossWrite down everything you lost and begin to collect written records of the loss. This is where your home inventory, if you made one, can be invaluable. If you don't have the inventory, one way to begin to reconstruct lost records is by sifting through catalogs or walking through store aisles to help to establish a value for lost items. Check with friends or relatives who may also have pictures of your property. Go around your property and take photos of the damage.

3. File your claimGenerally speaking, the sooner you file your claim the better. But you don't want to file until you're sure your claim is complete.
You want to be sure you've reconstructed your loss as accurately as possible. You want to avoid settling a claim and then realizing later you left out significant property.

4. Settle your claimYou may not want to jump on your insurance company's first offer.
"Insurance companies are paying a lot more attention to the claim side of the business," says Stewart H. Welch III, a certified financial planner and author of "Estate Planning for Baby Boomers and Retirees."

"They are much more tuned to their bottom line than they were in the '80s. It's the claims adjuster's job not to give you more money than they have to."
Before settling on a figure, try to secure two or three estimates of what needs to be done and how much it will cost.

"You need to educate yourself with a firm estimate of what the repairs will cost instead of accepting the first offer right off the bat. This will give you a feel for what your actual costs may be and you can use it as a guide in negotiating with your claims adjuster," says Welch.
Protecting your finances after disaster strikesPage 1 2

"If you have to go back for more money, it's a very tough negotiation."- advertisement -
If you'll have to wait for the repair work to be done because of high demand, you'll want to discuss this with your claims adjuster. The cost of materials can easily escalate after a disaster, thus increasing the cost of the repair work. As an example, Welch says the price of lumber may jump because of a surge in demand. Even higher fuel prices can increase your repair costs.

Be sure to keep all correspondence from the insurance company and make notes when speaking with the adjuster -- including the adjuster's name and the date of each conversation. Don't hesitate to go over the adjuster's head to a higher level of official if you feel the settlement offer is too low. If the adjuster makes a visit to your property, be sure you or a trusted adviser is there to work with the adjuster.

If you're having a problem with your insurance company that you are unable to resolve, you can contact your state's department of insurance. There is a policyholder's service section in most Commissioner of Insurance offices.

5. Develop a financial strategyIf you've received a settlement check and you're still waiting for the repair work to be done, make sure to isolate the check in a separate account.
"Don't co-mingle the insurance check with your holiday money. All you'll get is a lot of great presents, but no money to make the repairs on your home," says Welch.
If your insurance proceeds don't cover your costs and you've used up your emergency reserves, there are other options for obtaining the money to make necessary repairs.
"If you have a life insurance policy with a cash value, you can borrow against it," suggests Alan Goldfarb, a certified financial planner in Dallas.

You can also borrow against your brokerage account.
"With some exceptions, the law allows you to borrow up to 50 percent of the current fair market value of your account on your signature. But you want to set up your ability to borrow in advance. It's called a margin loan and it's like a line of credit. You don't have to use it, but it's there if you need it," says Goldfarb, who suggests speaking with your stock broker who can advise you how to do this.

Another source of emergency funds is your retirement account.
"A lot of 401(k) accounts allow for borrowing for emergency use," says Goldfarb.
And when you pay it back, you'll be paying it back to yourself.
If your house is still standing, you can also use a home equity loan to get the needed cash for disaster repairs.

But try to avoid using high-interest credit cards tofinance the repair work, caution the experts. It's too costly.

Unexpected government help for disaster victims
Having where you live declared a federal disaster area is never a good thing. But such a designation could help some property owners obtain much-needed cash a bit more quickly.
Taxpayers who itemize are allowed by the Internal Revenue Service to deduct casualty losses -- "the damage, destruction or loss of property from an identifiable event that is sudden, unexpected or unusual." Usually, this means waiting to claim the loss on your next income tax filing.

However, when a house, car or business is damaged or destroyed by an event deemed a major disaster by the president, the wait for tax refund money attributable to disaster losses is cut dramatically. In these extreme cases, taxpayers can deduct their losses in the tax year before the event happened by filing an amended return.

When the Federal Emergency Management Agency, or FEMA, announces that the president declares major disasters in certain areas, the way is cleared for special federal help, including tax options.

Hurricane-related tax relief generally includes extended filing deadlines and easing of related penalties for individuals and businesses located in the designated disaster areas. The relief also usually applies to those whose tax records are located in the damaged regions (at an accountant's office, for example), and workers from any location who are there providing help to victims.

In addition, taxpayers in federal disaster areas also have the option to amend their previous-year tax returns and claim the catastrophic losses they suffered this year on the old return. In many instances, amended filing will make the individual eligible for an immediate tax refund -- money that could be used to live on or begin repairs.

This often is the case for filers who didn't itemize deductions the previous year; if the total of the casualty loss and any other itemized deductions will amount to more than the standard deduction they originally took, refiling is generally to their advantage.

Even taxpayers who did itemize might find an amended return worthwhile if the disaster damage produces more than originally deducted.

Not the best move for everyoneWhile the option to time-shift federal disaster casualty losses to the previous year is a great advantage for some, it's not the best move for all taxpayers.
Some storm victims might find that while their losses are substantial, they aren't sufficient to meet two tax-law limits on casualty claims. First you must reduce the amount you can claim by $100. Then, you have to reduce the total of all your casualty losses by 10 percent of your adjusted gross income.

Thanks to tax-law changes enacted in the wake of 2005's hurricanes, taxpayers who suffered losses attributable to Katrina, Rita or Wilma do not have figure these limitations. For these people, the entire amount of their unreimbursed personal property losses is fully deductible.

Tax experts also say that people who had very high taxable income the year in which they could claim the losses and expect very low income the year of the disaster might be able to deduct more of their losses by waiting until they file their return the following year.

The deadline for choosing this option usually is the due date of a filer's current year return. However, the IRS announced Feb. 10 that victims of last year's hurricanes have until Oct. 16 to file amended 2004 returns and claim any losses against that tax year.
So evaluate your individual circumstances -- tax, damage and financial recovery needs -- carefully. And be sure that the calamity is a certified federal disaster to get the immediate relief.
Hurricane victims with questions on deducting their Katrina, Rita or Wilma losses can download Publication 4492 or call the IRS's special toll-free hot line at 1-866-562-5227.
Paperwork you'll have to fileIf you meet the loss limits, the process to claim them is the same regardless of whether you file an amended return or wait until next filing season.

The first step is gathering the proper forms. To claim disaster losses, you must file the long Form 1040 individual tax return, Form 4684 to figure and report your casualty loss and Schedule A to itemize your loss deduction. If you need to file an amended return to claim losses, use Form 1040X instead.

Then determine how the damage has hurt your property's fair market value. This is a two-part valuation: What your property was worth immediately before the catastrophe and what it's worth after.

The predisaster value is your "adjusted basis." For homes, this usually is the cost of the property plus certain adjustments such as improvements that add to the structure's value; for vehicles or other personal property, it may be depreciation that reduces its value. Then get an appraisal for the post-storm value of the property and compare it with your adjusted basis. The difference between the two amounts is your loss from the casualty.

Once the loss is determined, use Form 4684 to figure the deductible amount of your casualty loss. You must reduce the initial loss claim amount by any insurance or other reimbursement you have received. If you have insurance on your property, you must submit a claim in order to use the damage to it as a casualty loss. In other words, you can't decide you don't want to pay the deductible your insurance would require and then use the total, unreimbursed loss amount as your casualty claim. And all insurance payments must be used to repair or replace your property, or any excess not used for these purposes could be a taxable gain to you.

Next, the IRS requires you to further reduce your loss by $100. Finally, you must reduce the total yet again by 10 percent of your adjusted gross income to get to your final casualty loss deduction.

Figuring the cost of damageThe following worksheet shows the computations that a hypothetical Tom Taxpayer, who suffered through a federally declared flood disaster, had to make. The water substantially damaged Tom's home, the property inside and his car. Insurance covered only a part of the losses.

Tom's adjusted gross income is $60,000, and that's what he uses to figure his casualty deduction. Tom was off work -- and without pay -- for the week that his employer was closed during the flood. Unfortunately, Tom can't claim the lost income. The IRS provides no deduction for missed wages, even in the event of federal disasters.d

House and land
Property
Auto
Total
1. Original Property Cost
$100,000
$25,000
$18,000 a
2. Fair Market Value (basis) before disaster
$150,000
$15,000
$12,000 a
3. Fair Market Value (appraisal) after disaster
$75,000
$5,000
$4,000 a4. Decrease in value (line 2 minus line 3)
$75,000
$10,000
$8,000 a5. Smaller of line 1 or line 4
$75,000
$10,000
$8,000 a6. Insurance reimbursement
$50,000
$5,000
$4,000 a7. Loss after reimbursement (line 5 minus line 6)
$25,000
$5,000
$4,000 a8. Total loss (total of line 7 entries):
$34,0009. Subtract $100
$10010. Loss after $100 rule
$33,90011. Subtract 10% of Adjusted Gross Income
$6,00012. Amount of casualty loss deduction
$27,900

Now it's time to figure out the "real money" value of your deduction. Remember: Your deduction doesn't directly translate to the amount of whatever refund you will receive. You must refigure your taxes using this new deduction (entered on Schedule A and Form 1040X) to determine just how much you'll get back.

Tom, a single filer, decided to amend his 2004 tax return since he took only the standard deduction of $4,750 when he filed last year. The larger deduction amount will lower his tax bill and, depending upon how much he paid in taxes last year, he could be eligible for a nice refund. As soon as the IRS gets his amended return, that new refund will be on its way to him.
However, if Tom is not in dire need of the cash, he should run the numbers using 2005 tax rates. Depending on Tom's circumstances, he might find it more worthwhile from a tax standpoint to claim his disaster losses on his coming return.

Cleanup and repair costsTom was able to get such a good tax result from his difficult situation because he kept track of what he spent to clean up and repair his property, the main concerns after a disaster strikes.

Keep in mind, however, that the tax laws won't allow you to specifically get back that $5,000 you paid to have the carpets cleaned after the flood. There is no place on Form 4684 for you to enter this expense and have it directly count as part of your casualty loss deduction.
But because your flooring was damaged by the floods, you can use what you spent to repair it as a measure of how much your home's property value was reduced by the storm. This in turn will give you a more accurate assessment of your property's damage and the tax deduction value of the loss suffered.

In Tom's case above, the $75,000 post-disaster value of his home takes the floor damage into account. If the carpets didn't need the professional cleaning, then his home might be worth $80,000. This would mean that the amount he could claim as a casualty loss would be only $22,900 and his tax relief would be less.

The IRS notes that expenses for repairs should take care of the damage only. You can't have the repair crew improve on the original status of your property.
Record keeping requirementsAnd even though the IRS allows disaster victims some tax leeway, the agency still demands that casualty losses, like every deduction, be substantiated and supported.

The IRS does not require you to keep your records in a particular way, only that you keep them in a manner that allows you and the IRS to determine your correct tax. While you don't have to submit your documentation with your return, you should keep your records handy and be able to show the following if asked:

* The type of casualty and when it occurred.

* That the loss amount claimed was a direct result of the casualty.

* That you were the owner of the property or, if you leased it, that you were contractually liable to the owner for the damage.

The simplest way to track loss substantiation is in your checkbook. There you can enter income and loan or insurance reimbursement deposits along with all checks written for expenses accrued in connection with your disaster loss. Be specific: note amounts, sources of deposits and types of expenses.

Holding on to other documents, such as receipts and sales slips, also can help prove a deduction. Keep your records in an orderly fashion, such as placing documents related to a particular event in a designated envelope, and, where applicable, store them by year and type of income or expense.

And don't forget your camera. Photographs showing the original condition of the property and ones taken after the disaster struck can be helpful in establishing the condition and value of your property.

Other filing rulesWhen you do send in your amended return, explain that the refiling was due to casualty losses incurred in a federal disaster and attach Form 4684 to show how you figured your loss. Be sure to specify the date or dates of the disaster and the city, county and state where the damaged or destroyed property was located when the disaster occurred.

And what if you thought you escaped, only to find out that the disaster was just a bit slow in arriving? This might be the case if you live in a federal disaster area and state or local officials decide that your home, even though it suffered only minor damage, must be moved or torn down for public safety reasons, such as ensuing mud slides.

You still can take advantage of the casualty loss deduction as long as the government-ordered demolition or relocation of a home is issued within 120 days after the original federal disaster declaration. It might be government contractors doing the damage this time, but your resulting loss is treated just as if it were damaged in the natural calamity.

Freelance writer Kay Bell writes Bankrate's tax stories from her home in Austin, Texas, and blogs each day on tax topics at Don't Mess with Taxes.

Power's out. Now what?
Hurricane Katrina has left more than 1.7 million homes in Louisiana, Mississippi, Alabama and Florida without power. Would a massive power outage throw your family into chaos? Or, do you have a plan?

Whether at home, work or at play, when an emergency strikes, families need to be prepared. "We strongly encourage people to take the time before an emergency to do some basic preparedness activities," says Keith Robertory, preparedness expert for the American Red Cross. "It's crucial that people learn what emergencies may occur, plan how they will communicate with their family and loved ones before, during and after an emergency. Determine what actions they will take for each potential disaster, gather necessary supplies and get trained in CPR and other lifesaving skills," says Robertory.

The American Red Cross offers safety tips to help families prepare before and after a disaster.
Be proactiveThe time to prepare is before a disaster or emergency occurs. Everyone in the household should know where to go and what to do in the event of different situations. Once a plan is in place, make sure everyone in your family is informed and practices the plan together. The Red Cross recommends that each family identify one out-of-town person known by all family members to contact in case of an emergency. That person can act as a liaison should family become separated.

Build a disaster kitWhether you need to evacuate or can stay in your home, a well-packed disaster kit can save lives. Put your supplies in an easy-to-carry container such as a backpack, duffel bag or plastic bin. Be sure to include a flashlight, batteries, battery-operated radio, bottled water and a small supply of high nutrition nonperishable food. The Red Cross recommends one gallon of water per person (and pet) per day. Include medical supplies such as family medications and a first-aid kit. If you have infants, pack diapers and infant formula.
It's also wise to have a couple of plastic coolers available for food storage. Pack a digital thermometer. This will come in handy if you need to check the freshness of perishable foods once power is restored.

Your disaster kit should include some cash for emergencies. If possible, put away enough cash to provide for your family for a couple of days. If the power is out, many restaurants and stores cannot process your credit cards because their machines are electric-powered.

Blackout safety tipsIf power is lost, the American Red Cross suggests families use flashlights, not candles. A burning candle is a fire hazard.

Turn off all electrical equipment in use when the power went out. This includes air conditioning, computers, televisions, etc.

Run generators outside. Plug electrical appliances directly into the generator. Do not attempt to connect the generator to the family's electrical system.
Use your battery-operated radio to follow broadcasts for updated information.

Avoid using the telephone (cellular and land) if a large number of homes in your area have been affected. The emergency services agencies need to have access to the phone lines. Only use the phone in case of an emergency.

Children and pets need to be reassured that all is OK. If a parent remains calm and controlled, other family members are likely to follow the lead.

During and after a power outage, care must be taken with food to prolong freshness and prevent food poisoning. Avoid opening the refrigerator or freezer. Food stored there will stay colder longer. An unopened refrigerator will keep food cold enough for at least a couple of hours. A half-full freezer will hold up for 24 hours, a full freezer for 40 hours.

If the power outage will be longer than two to four hours, pack perishables such as milk, dairy products, butter, eggs, meat, fish and leftovers in an iced cooler. If the power will be off for an extended period, pack your freezer foods in an iced cooler as well.

As soon as the power returns, check the food. If the frozen food has ice crystals and is above 40 degrees Farenheit, you can refreeze. Perishable food from the refrigerator should not be above 40 degrees for more than two hours. It's best to dispose the items rather than chance food poisoning. For information on food freshness, the American Red Cross Web site has an excellent chart.

Check your disaster supplies kit every six months to exchange items that will expire.
For more tips on how to keep yourself and your family safe during all types of disasters (both man-made and natural) contact your local Red Cross chapter or log on to http://www.redcross.org/.

Is your home really covered by insurance?
You expect your homeowners insurance policy to help you recover from a catastrophe by providing you with enough cash to replace anything damaged or destroyed in such an event.
However, read your policy carefully. You may not have the protection you think you do.
"It is standard for most homeowners policies to cover only the actual structure of the house -- not its contents -- for replacement-cost value," says Don Griffin, vice president of personal lines at the Property Casualty Insurers Association of America.
Unless your policy specifically states otherwise, your home's contents usually are covered only for "actual cash value."

So what's the difference?
Replacement cost or actual cash value?When you file a homeowners claim, the insurance company calculates how much to pay you by evaluating the cost to replace your property with new property of the same kind and quality. But here's the critical distinction: If your policy covers your personal property (your home's contents) for its actual cash value, the insurance company deducts depreciation from your personal property's overall value before arriving at a figure.

Your check will usually be less, sometimes significantly less, than the amount it will cost to restore, repair or replace the damage or loss. However, if you have replacement-cost coverage, the insurance company will pay what it costs to repair or replace your damaged possessions at today's prices without deducting for depreciation.
While actual-cash-value language is standard, most insurance companies offer replacement-cost coverage as an option.
"Cost depends on the individual insurance company and its experience in a given area," explains Griffin. "Generally, replacement-cost coverage runs about 10 percent more per year than actual-cash-value coverage, depending on the type of property. Renters replacement-cost coverage, for example, can be about 20 percent more than actual cash-value coverage."
"Going with actual-cash-value coverage is a way to save some money at the front-end for the homeowner, if that's the homeowner's key concern. However, in this day and age, most agents recommend [replacement-cost coverage]," Griffin says.

You need to weigh the additional cost of replacement coverage against the potential for additional cash outlay should disaster strike. Without it, you will have to cover the gap between the cost of replacing a damaged item and the amount the insurance will pay toward that total value once it has deducted for depreciation. The longer you own your house or personal property, the more depreciation becomes an issue and replacement-cost coverage becomes more critical.

Replacement-cost coverage variesDifferent insurers offer varying levels of replacement-cost coverage, so you need to check your policy or with your insurer to see what is covered in your area and what the limits are. Some companies add maximums to replacement-cost coverage policies, to protect themselves from overexposure in the case of loss.

For example, some insurers limit the replacement value on roofs. "The insurance company wants to limit its liability on old roofs," says Griffin. "Some people were waiting to replace old roofs until after winter storms."

Homeowners would file claims for storm damage, and the company would then replace the old, ready-to-be-replaced roof. Now, some insurance companies limit the amount payable on replacing a roof, especially when it is over a certain age.
Other companies limit or exclude items in other categories such as business property, film, tapes, cassettes, records, art, memorabilia or collectors items. Check with your insurer to determine if you need special riders to cover your particular items.
Remember, you are insuring your home and your possessions -- not your land. Think about what it would cost to rebuild your house and replace its contents, not what the market value of the house is.

Inventory your valuablesCalculate the value of your personal possessions by creating an inventory. Keep the inventory in a protected place outside your home such as in a safe-deposit box. If you have especially valuable items such as jewelry, artwork or computer systems, you may need additional insurance to cover them.

Written appraisals for jewelry, along with photographs, should be stored with your inventories. The insurance company will need this information if you have to file a claim. Also, if your house is broken into or destroyed, you will be able to identify missing items more readily by using an inventory.

While videotape is great for documenting your large possessions, a written inventory is critical for noting small items. It's best to inventory all of your items with a detailed description, including make, model, price paid, location and date of purchase. Keep photocopies of your receipts or other pertinent information with your inventories. Go through your house room by room and complete a written and visual inventory for each one.
Heidi St. Jean is a freelance writer specializing in insurance, financial services, business and technology. She is based in Simsbury, Conn.

Floods: Don't get swept away by losses
Whether the danger comes from a rising tide or a thunderstorm, flooding is a risk homeowners face across the United States. Yet basic property policies don't insure against flood damage, leaving many people vulnerable to a potential catastrophe.- advertisement -
Homeowners must turn for coverage to the Federal Emergency Management Agency and its National Flood Insurance Program.

"Floods can and do happen at anytime, and they can happen anywhere,'' says Lena Thompson, a program analyst with FEMA in its bureau of federal insurance administration. "We all live in a flood zone; it's just what our degree of risk is within that.''

In fact, the United States is divided into low, moderate and high-risk or special hazard locations, Thompson says. In the most serious-risk locations, all home buyers are required to have flood insurance before they can obtain a federally insured mortgage.

But flood insurance isn't just for protecting against water from an overflowing river; it also covers damage from water that builds up during storms. In that way it differs from standard homeowners' policies, which insure against damage from rain that comes through a broken window but not against water from something like a hurricane's tidal surge.
Nationally, flood insurance averages around $432 a year, and premiums vary widely depending on the zone in which the house is. It can be purchased through companies such as State Farm, which sells policies through its network of agents even though the coverage is technically financed by NFIP.
To obtain coverage, homeowners must live in one of the nearly 20,000 communities that have an agreement with the federal government, Thompson says

The four phases of recovery from a natural disaster
When you are a victim of a natural disaster, there are four phases to go through to get aid: application, inspection, Small Business Administration loan and other assistance, including grants. Sometimes these phases overlap.

Applications and formsWhen a federal disaster is declared in your area, a member of your household will be directed to call a toll-free number (1-800-621-3362) to register your family. Just one member of a household should call -- preferably, a person who signed the deed or lease.
The number connects you to the Federal Emergency Management Agency's national phone center in Denton, Texas. Among the questions you will be asked:
* What's your name, the address of your damaged dwelling, and a phone number where you can be reached? If you don't have a phone -- say, your house was destroyed and you're staying at a shelter set up in a high-school gym -- you'll be asked to provide the phone number of a friend or relative who can reach you. If you can't provide a phone number right away, you can always call later to give your contact number.

* What's your mailing address? If your home was destroyed and mail can't be delivered there, you'll be asked to provide an address where you can get your mail. Otherwise, you'll be told to pick up your mail at a post office.

* Are you a homeowner or renter?

* How many people live in your household?

* What's the household income?

* Generally, how much damage did your home and your personal property sustain?

* Were you insured?

* You'll be given a disaster identification number. You'll use it in your dealings with various government agencies. DON'T lose the number. Have it tattooed backwards on your forehead so you can read it in the mirror (just kidding, but it is that important).
In a week or so, you will receive a packet from FEMA containing:
* A printout summarizing the information you supplied.

* Information about help you might qualify for: e.g., low-interest loans, grants, emergency housing. * Contact information for various agencies.

* A letter specifying which programs you have been referred to.
While you're waiting for the FEMA letter, file insurance claims and contact lenders -- for your mortgage, car, student loans and even your credit cards -- to let them know what's going on. If the disaster put you out of work, your creditors need to know.

Sometimes lenders will suspend payments until you get back on your feet. This is the case with federally guaranteed student loans, and your mortgage lender should help you out, because the last thing the lender wants to do is foreclose on a disaster-damaged house.

Inspecting the propertyThe next step is to undergo inspections -- in some cases, lots of them.
You'll probably deal with insurance adjusters for your home and car. If your home was damaged by flood or earthquake, and you had coverage for that calamity, you might deal with a separate insurance adjuster focusing on that.
After you register with FEMA, you'll get a call from an inspector to set up an appointment. The inspector is required to try at least three times to contact you, preferably on different days and at different times of the day. You or a representative (such as an attorney or spouse) must be present when the inspector looks over your property.

The FEMA inspector will survey the damage and hand you an application for aid, if one wasn't included in the packet you received in the mail. The application will say it's for a Small Business Administration loan. Even if you don't own a business and you wouldn't be able to repay a loan, fill out the application. It is used to determine whether you qualify for grants that you don't have to repay.

If you apply for aid from the Small Business Administration, an inspector called a loss verifier will assess your property.

If power, gas, water or sewer lines were cut in the disaster, you'll have to deal with utility inspectors before service is restored.

Looking for loansThe Small Business Administration will lend you money to pay for certain uninsured losses if you can afford to repay the loan. You don't have to spend your savings or apply for a loan at a bank as a condition of borrowing from the SBA.

The SBA offers personal property loans and real property loans. Interest rates vary, depending on how much it costs the federal government to borrow money and whether you are able to get credit elsewhere.

A renter or a homeowner may apply for a personal property loan. With it, the SBA will lend you up to $40,000 to repair or replace clothing, furniture, appliances, automobiles, perishable food, even dentures and eyeglasses. You can't use the money to replace extraordinarily expensive items such as that antique Louis XIV desk or your collection of rare baseball cards.
Homeowners may apply for a real property loan. With it, the SBA will lend you up to $200,000 to repair or restore your primary home. You can't borrow from the SBA to restore your vacation cottage. (If you own rental property, you can apply for an SBA business loan.)
In some cases, the SBA will refinance your mortgage at a lower rate.
When you apply for an SBA loan, you give the Internal Revenue Service permission to give the SBA information from your previous two years' tax returns. If you have been a tax cheat, you are likely to be ensnared when you apply for an SBA loan -- one reason not to evade taxes.
"We've gotten credit for getting a lot of people into the tax system," SBA spokesman W. Donald Waite says with a smile.
Other assistance is available

You have to repay SBA loans.

You don't have to repay grants.

And FEMA coordinates a gamut of grants.

First, FEMA gives out emergency grants for disaster-related medical, dental and funeral-related expenses not covered by insurance. If a loved one dies in a disaster and you don't have the money to pay funeral expenses, this grant is what you need. You might be referred to one of these grant programs when you make that initial call to register with FEMA.
FEMA will give property owners up to $15,000 for emergency repairs to make a structure fit for habitation.

The agency, together with the state government, gives out what are called Individual and Family Grants. These are given to people who are turned down for SBA loans because of inability to repay. They can be used for the same purposes as SBA loans.
FEMA also offers grants to state and local governments for "hazard mitigation" -- elevating houses above a flood plain, for example, or strengthening structures in earthquake zones.
Believe it or not, the IRS will ride to your rescue, too. You can file an amended return called a 1040X and deduct your disaster-related losses against last year's income. This can be a lifesaver because it means you can get a hefty tax-refund check in a few weeks instead of having to wait until next year to file a return. If you can afford to wait, you can deduct your disaster losses against your current year's income.

source from : bankrate.com