Mitigate the Financial Impact of Disasters

Spring time in Oklahoma can be beautiful, but it can also be dangerous. Last week’s wildfires and the upcoming storm season remind us that disasters — natural or manmade — can strike at any time. While your family’s health and security are the most important considerations, regaining order in your finances is essential for returning to normal life. The Oklahoma Society of Certified Public Accountants advises that proper planning and preparation before disaster strikes is crucial. The OSCPA offers four basic pre-disaster preparation tips.

Keep records in order.
In the wake of a disaster, documentation may be necessary. This includes personal identification, insurance papers and banking and investment information. CPAs advise keeping all of 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; as well as stock and bond certificates. Other important papers include those with information and contact details for 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. You may also 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 a home safe or even your 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 an original will there. Instead, keep the original at your lawyer’s office or other secure and accessible location.

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

Have some cash on hand.
How will you pay for food, a hotel or other needs if you are forced to leave your home? If the power goes out in your area, banks or ATMs may be unavailable. That’s why it’s a good idea always to 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. Additionally, try to establish three to six months’ worth of living expenses for you to later access during disaster recovery.

Use free resources
These are a few of the steps that CPAs recommend to make sure your family is prepared for a disaster. For more guidelines, check out “Financial Planning: A Guide for Financial Preparedness,” a booklet made available to you by the American Red Cross, the American Institute of CPAs and the Oklahoma Society of CPAs. You can obtain your own copy by visiting

Recover after a disaster.
The weeks and months following a disaster can be confusing and difficult. When confronting a personal or national crisis, there are numerous financial issues and personal concerns to address. 

In the wake of a disaster, take time to absorb what happened, seek advice and refrain from making immediate financial decisions.

“The first step toward financial recovery is to prepare a plan for managing your income, expenses and debt,” said Daryl J. Hill, executive director of the Oklahoma Society of Certified Public Accountants. “If you’re in need of cash, determine whether you’re eligible for disaster relief funds from federal, state or local governments.

“Make every effort to keep up with your bills and call your creditors to explain the situation and work out a revised payment plan.”

Estimate the losses you have sustained as a result of the disaster, gather your policy numbers, and then file appropriate insurance claims. Claims are frequently settled in the order in which they are received. If you do not have a complete listing of household items, check with relatives and friends for photographs taken in your home that may help to support your claim.

Additionally, if you’ve been injured and cannot work, you may be eligible for monthly disability insurance benefits. Apply as soon as possible to protect your income flow.

If your property has been damaged or destroyed by a casualty and your loss meets IRS deductibility guidelines, you may be eligible for a tax refund based on your losses. Usually, this means claiming the loss on your next income tax return. However, if the property is declared a federal disaster area, you may be able to accelerate your deduction by amending your return for the prior tax year.

Determine the extent to which the disaster has resulted in the loss of valuable personal and financial records, such as your Social Security card, driver’s license, bank statements, stock certificates and recent bills. Remember to make a complete list of these documents and obtain copies.

Inevitably, disasters compel you to reconsider the role of insurance. Evaluate whether you have the right type and amount of property, health, disability and life insurance.

Once you recover from a disaster, take steps to establish a financial cushion. Keep these funds in a safe, easily accessible account and use them only during an emergency.

For many people, disasters demonstrate the importance of having a will. A will names your heirs and appoints a guardian if you have young children. If you die without a will, the state decides who gets your possessions — for a fee.

The American Institute of Certified Public Accountants, the American Red Cross and the National Endowment for Financial Education have created a brochure to help people affected by disasters recover from financial loss. The booklet, “Disaster Recovery: A Guide to Financial Issues,” is available at 

Updated 03-15-2011

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