Prepare Customers if Disaster Strikes

As I write these lines, the talk in town appears to be about the Democratic and the Republican conventions, the nominees, jobs, the economy, the U.S. Open finalists and other issues we wonder and worry about daily sipping coffee. Weather talk, random and as boring as elevator music, catches our attention only if a hurricane is about to hit town. And right now quite a few are lining up.

Natural disasters can and do occur anytime during the year even though June is considered the beginning of hurricane season. According to the National Foundation for Credit Counseling of Silver Spring, Md., "after surviving the initial unexpected crisis, many consumers find themselves struggling to recover financially, too. While none of us wants to imagine Mother Nature striking close to home, it does happen, and if consumers find themselves ill-prepared either through a lack of savings or being uninsured, another type of disaster awaits: financial ruin."

Earlier this year, NFCC quoted MSN Money 2008 Financial Literacy Survey data showing 36% of adults have no savings outside of retirement, with a full 31% without homeowner's insurance, while up to nine in 10 renters are not insured. Given what seems to be part of a popular culture that does not understand the importance of insurance, ignores the option, or simply cannot afford it, the fact that 67% of all homebuyers and renters do not have disaster insurance is not surprising. Even after Hurricane Katrina and Hurricane Rita reminded everyone how fragile we all are in the face of nature and sudden disasters, it appears that the overused expression "Old habits die hard" stands true.

"It is so important for families and individuals to know there are ways to proactively protect personal finances in the event of a natural disaster - be it hurricanes, tornados or single instances of fires or storm damage," said NFCC spokesperson Gail Cunningham. "By having a plan in place, and knowing what to do in case an evacuation is necessary, Americans can make an agonizing time a little less difficult."

Efforts to avoid one's financial ruin, NFCC suggests, may be as simple as following a few financial tips that help manage an unpredictable and costly disaster. So credit counselors need to walk the extra mile to ensure customers are knowledgeable and prepared. First, it is important to check the insurance coverage to determine if additional coverage for fires, earthquakes or other special situation losses is needed. NFCC warns, "Review the policy for potential inclusion of wind and hail, umbrella liability and flood insurance. Most standard insurance policies do not cover these acts."

Homeowners will be better off if they buy full replacement or replacement cost coverage instead of cash value "since most items depreciate in value." Renters can benefit from a insurance that covers damaged, destroyed or stolen personal property. At the same time, both homeowners and renters should have a complete household inventory in an offsite location. "Pictures or videos will make claims much easier, and the last thing you want to do under stress is rely on your memory," NFCC said.

In addition, it is helpful to put together a family evacuation plan, since it may be necessary to evacuate the area. As soon as the threat of a storm is announced, have access to ready cash and fill up the gas tank.

A rented safe deposit box at an offsite location is the best solution to ensure originals and copies of important papers in case of the loss of the home. Besides medical records, emergency contacts, prescriptions, insurance policies, backup disks of critical computerized information and birth certificates, it is important to put together financial information such as a list of all credit cards and bank or brokerage accounts, complete with account numbers and contact information. "Store the key in a place where you can quickly grab it during an evacuation." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/