BY ALEXANDER SMITH

September 22, 2010 In addition to its struggling economy, America has been facing an influx of natural disasters. Wildfires in the West, flooding in the South and Midwest, hurricane season on the coasts, and the threat of earthquakes in the Southwest. 2010 marked the fifth anniversary of Hurricane Katrina — New Orleans is a testament to how a natural disaster can shut down an area’s industry and progress. Now that the B.P. oil catastrophe has further littered the Gulf with devastation, the financial recovery of the local economy has been delay further. Statistics show that 90 percent of small businesses fail within one year of a disaster, unless they can resume operations within five days. Then there are the many victims of the Indiana Floods of 2008, in which a foot of rain unexpectedly cascaded onto the country-side, who are still waiting for promised support from the Federal Emergency Management Agency (FEMA). The agency had offered to help the local governments purchase property from owners that resided on land dangerously vulnerable to flooding. These buyouts are not automatic and definitely not quick. Some residents are still living in homes that have become unsafe years later, and are suffering the life threatening consequences. One thing that’s clear is this: It’s up to you to be financially ready to survive a natural disaster. Of course, escaping with your life is the most crucial step for surviving a natural disaster. But TSC can help you be prepared for everything that comes next. If you have a disaster plan, either for your family’s financial safety or for your continued success of your business, you will be able to keep your finances afloat. These five tips can help you stay in business and defend against disaster before it strikes you.

1. Be Informed Whether you rent or own a home or have a business, it is crucial to know the potential disasters in your local area and to remain up to date on progress of windstorms, flooding or fires and make sure to prepare for them. If you are new to the area, learn about what possible disasters might strike and if there is a particular season to be prepared. Check the FEMA Federal disaster declarations page for current safety updates and warnings. If you are a business owner, learn what to do during a biological, chemical, explosive, nuclear or radiological attack. How would you recover from such an incident? Although some forms of these disasters are extremely unlikely, the shock factor of it actually happening catches people off guard who did not have a disaster response plan. Brainstorm all possible internal problems that could arise in your business and cause it closing. For instance, a server shutdown, the loss of several employees because of blocked roadways, office fires or burst pipes. All of these unexpected problems could shut down your business even if only temporarily, and these smaller disasters are more likely to occur than a huge city-wide disaster.
2. Continuity Planning If a natural disaster strikes, you will not have time to organize a back-up plan, so have that plan ready. For homeowners, make sure your family knows where to meet and what to do. Practice your plan so you know that everyone understands the procedure. Tips are provided by www.Ready.gov to help your family remain safe and communicate well during a disaster. Keep all of your important financial papers in a fire-safe box. Include cash savings because ATMs might be down during a disaster. The amount varies depending on whether you have insurance or not, but keep enough to comfortable keep your family protected for three days but preferably more. Have your extended emergency contact list prepared so you can contact family, friends and authorities if needed. Cellphones might not work during a disaster so keep a written copy of all important numbers in your fire-box. In addition to the precautions above, business owners must set a bottom line. This will define what is absolutely necessary to run your business. Determine which staff members, materials, procedures and equipment are absolutely necessary to stay in business. Identify the operations that are necessary for financial survival. Establish a procedure for succession of management so there will be no confusion as to who takes the lead if necessary. Create a contact list of business contractors and others you will need to use in the event of an emergency. Use a fire-safe box for your financial documents and all contact information that are essential for your continued success.
3. Disaster Insurance For homeowners, insurance is meant to protect you from financial catastrophe resulting from a severe disasters from which you could not easily recover on your own. Although the premiums might be high, insurance is your choice because often protection is not mandatory. In California despite the prevailing risk of earthquakes, the vast majority of homeowners in California go uninsured. Only a staggering 12 percent of California residents are covered. According to the USGS the ten states most prone to earthquakes are: Alaska, California, Hawaii, Nevada, Washington, Idaho, Wyoming, Montana, Utah and Oregon. Although the likelihood that an earthquake, flood or windstorm will destroy your home may be unlikely, this excuse may not be a good enough reason to go uninsured. 39 states have had earthquakes since 1900 and more than 90 percent of Americans are considered to live in an area that is seismically active. Most states that are threatened by earthquakes offer coverage through the home-owner’s insurance policy. In California most policies are sold through a state-run insurance pool known as the California Earthquake Authority (CEA). There are also some private insurers available as well. For more information on earthquake insurance, MSN offers tips. America is a nation prone to flooding. Every year each state in the nation spends money repairing damage from floods. The states with the most annual flood damage are: California, Oregon, Texas, Colorado, Louisiana, Missouri, Iowa, Illinois, New York, Pennsylvania, Connecticut and Rhode Island. The National Flood Insurance Program (NFIP homepage) operated by the federal government offers protection for basic needs. For states that are prone to flooding, your mortgage lender may require you to access coverage before taking out the loan. Hurricane season is officially from June 1 to November 30 each year and threatens the whole Eastern seaboard from Texas to Maine. Tornadoes can cause serious damage and are most common in Florida and “Tornado Alley” which is the nickname given to to an area in the southern plains of the central U.S. that consistently experiences a high frequency of tornadoes each year especially in late spring and early fall. Hurricane and windstorm insurance varies by state. Several southern states including Alabama, Louisiana, Florida, Mississippi, North and South Carolina, and Texas offer a coverage pool for people who are unable to obtain private coverage. Surviving the Unexpected When Hurricane Katrina hit, most residents thought they had hurricane coverage in their home-owner’s insurance, and most did. However, their coverage excluded flooding which as a result of the hurricane caused most of the damage in New Orleans. Most home-owner’s insurance does cover wind damage but only water damage that enters through “wind damaged areas.” If you decided not to insure your home from a natural disaster, make sure to have a large amount of cash savings within reach. Remember, in a natural disaster ATMs might be down. An alternative, is to access a home-equity line of credit to have in reserve in case disaster repairs are needed. The time to get these loans is before a disaster strikes and your home’s value plummets. Many earthquake experts forgo the high premiums of disaster insurance because they mitigate disaster damage by fortifying their homes through professional construction. The Red Cross advises residents to remove breakable items from high shelves and install latches to keep cabinet doors shut. These are very affordable measures that can increase safety and reduce damage expenses. Other more comprehensive mitigation projects include: Installing a tornado proof room in your home, or having a professional anchor your home to its foundation. Homes that have modern earthquake resistant structures can be just as effective as an insurance policy and may have the added bonus of increasing the home’s value. Rooves that are bolted tightly to the structure are less prone to flying off and being damaged in disasters.
4. Governmental Support When a disaster strikes, the government might not get involved as soon as you would expect. FEMA and SBA, which offers low-interest loans, will step in and help residents only after the President has declared the destruction a major disaster. So, although your home may have been destroyed, there may not have been enough damage from a national perspective to send in the cavalry. Even if the government tries to intervene the damage may be so widespread that it will take a long time for your turn to come, as is happening for Niece in Indiana. This is one risk of relying on governmental support instead of purchasing disaster insurance. For business owners the U.S. Small Business Association (SBA) offers low interest loans for businesses to repair or replace real estate, personal property, machinery & equipment, inventory or business assets that have been destroyed in a declared disaster. This help is not free – it is a loan. Be wary of increasing debt especially when trying to regain stability.
5. Emergency Supply Kit For the immediate affect of a disaster whether at home or in a business, keep three days worth of essentials including fresh water, food, clean air and warmth in reserve. It is recommended that you get a NOAA Weather Radio with an alert function, flashlight and a first aid kit. Please find a full-list of emergency kit items from www.Ready.gov. Your firebox with financial documents should include for each of your family members: your current passport, social security card, birth certificates, property titles, insurance policies, business licence, bank account numbers, copies of subscriptions for life-saving medications, and spare car keys.