What to Do if You’re the Victim of a Natural Disaster
Natural disasters can wreak havoc on individuals and families, often causing significant financial disruption in addition to emotional stress. And losing a home to events like hurricanes, wildfires, floods or earthquakes can leave you scrambling to figure out your next steps.
While the road to recovery may feel overwhelming, this article outlines critical financial steps to take if you lose your home in a natural disaster.
1. Contact Your Insurance Provider Immediately
After making sure your loved ones and pets are all safe and accounted for, you should notify your insurance company and file a claim. Acting quickly helps ensure you can access funds for temporary housing, repairs and rebuilding.
Key steps include:
- Documenting the Damage – Take photos and videos of what remains of your home and belongings before beginning any cleanup. This evidence will be crucial for your claim.
- Keeping Records of Expenses – Save receipts for costs like hotel stays, meals and transportation. These may be reimbursable under your policy.
- Staying in Contact – Follow up regularly with your insurance adjuster to monitor the status of your claim and provide any additional documentation needed.
If you don’t have homeowners’ insurance, look into federal and local disaster assistance programs to cover some of your losses.
Your Creative Planning insurance representative can assist you with any insurance-related matters.
2. Apply for Federal and Local Assistance
Government and nonprofit organizations often provide financial aid to those affected by natural disasters. These resources can help cover immediate needs like temporary housing, medical expenses and rebuilding efforts.
Available resources include:
- FEMA – Apply for grants to help with housing repairs, temporary living expenses and personal property replacement.
- SBA Disaster Loans – Low-interest loans are available to homeowners and renters for repairing or replacing damaged property.
- Local Charities and Nonprofits – Organizations like the Red Cross and Salvation Army provide financial assistance, clothing and temporary shelter.
Research all available programs in your area and apply promptly, as some funds are distributed on a first-come, first-served basis.
3. Reassess Your Financial Situation
Once your immediate needs are met, take time to reassess your overall financial picture. Calculate your current assets, liabilities and emergency funds to determine how much you can allocate toward recovery.
Steps to take include:
- Evaluating Insurance Payouts – Review the details of your insurance settlement to understand what’s covered and where gaps may exist.
- Prioritizing Spending – Focus on essential expenses like housing, utilities and basic living needs while deferring discretionary spending.
- Consulting With Your Financial Advisor – A professional can help you create a recovery plan and explore options for bridging financial gaps, such as personal loans or tapping into savings.
Your Creative Planning wealth manager can help you reassess your financial plan after unexpected events.
4. Manage Your Debts
If you’re still responsible for a mortgage or other debts tied to your damaged property, contact your lender(s) immediately to discuss your options. Many financial institutions offer relief programs for disaster victims.
Options to explore include:
- Loan Forbearance – Request temporary suspension or reduction of mortgage payments while you recover financially.
- Refinancing – If needed, refinance your mortgage to reduce monthly payments or access additional funds for repairs.
- Debt Consolidation – Combine multiple debts into a single, lower-interest loan to ease your financial burden during recovery.
5. Plan for Rebuilding or Relocation
Once your financial situation stabilizes, decide whether to rebuild your home or relocate. Both options require careful financial planning and a realistic assessment of your resources.
If rebuilding, make sure to:
- Work with experienced contractors familiar with disaster recovery and updated building codes.
- Use disaster-resilient materials to minimize future risks.
- Set a budget for rebuilding that includes a buffer for unexpected costs.
If relocating, make sure to:
- Research housing markets to find affordable options.
- Factor in moving expenses, utility setup costs and potential job changes.
- Consider working with a mortgage advisor to secure favorable terms.
6. Update Your Financial Preparedness Plan
As you recover, use this experience to strengthen your financial preparedness for future emergencies. Building resilience now can protect you and your family in the event of another disaster.
Key actions include:
- Replenishing your emergency fund with at least three to six months of living expenses.
- Reviewing and updating your insurance policies annually to help ensure adequate coverage.
- Digitizing and securing important financial documents for quick access.
Losing your home to a natural disaster is a life-altering event, but the steps above can help you recover and rebuild with greater confidence. If you need help navigating this process, contact your wealth advisor.
