Disasters strike unexpectedly, leaving victims to navigate emotional and financial turmoil. If you’ve been affected, taking thoughtful steps can make the recovery process smoother.

The first step in any disaster is to ensure the physical safety of you and your loved ones and that you have immediate access to food, shelter, and support.

After your basic needs are met, it’s time to move up the hierarchy to help ensure you can rebuild your life and return to or surpass your prior level of prosperity.

Follow the steps below to better position yourself for financial recovery following a disaster.

Set Short-, Mid-, and Long-Term Goals

Recovery involves balancing immediate needs with future planning. Before diving into the details of the process, define goals across different timeframes:

• Short-term. Secure housing; alert family, friends, and business contacts; start the process to replace valuable documents; change your mailing address; manage daily expenses; and ensure family safety.
• Mid-term. Determine a plan to repair or replace damaged property, stabilize income and expenses, and adjust insurance coverage.
• Long-term. Rebuild your home, restore savings, and plan for potential relocation or lifestyle changes.

Contact Industry Professionals

To better understand the timeline and steps involved in your goals, you may need to consult with professionals. As you begin to consider your options, you’ll be faced with more decisions in the short-term that many people make over a lifetime. Assemble a team of advisors and professionals to help you navigate the challenges that lie ahead. Each can provide a different perspective that will help you organize your next steps. You should consider connecting with the following professionals.

Insurance Agent

Contact your insurance agent to help you understand your coverage and policy, begin the claims process, and navigate your next steps. Reach out to your insurance company as soon as possible to report damages and to obtain a detailed copy of your policy and coverage.

Evaluate and understand the various details of your policy such as whether there are any time limits to submit claims, relocation or additional living expenses coverage, your personal property limits, as well as smaller items like whether the policy covers applicable HOA fees during your displacement and what coverage you have for day-to-day expenses.

Provide detailed descriptions and supporting documents, such as photos or videos, to expedite the process. Keep detailed notes and records of all communications, including who you talked to and when and what was discussed—and keep your receipts and paperwork organized and accessible.

Independent Adjuster

This is a professional that represents the insured and negotiates on behalf of the insured with the insurance company. While your insurance company will assign its own adjuster, you may benefit from hiring an independent adjuster to ensure your claim reflects the full scope of your losses. An independent adjuster works for you, not the insurer, and can advocate for a fair settlement.

Family Attorney

This includes an estate and trust attorney. They’ll assist in reviewing legal options as well as how decisions made will impact your long-term estate plan.

Wealth Advisor

Your wealth advisor can help you understand your cash reserves, investment accounts, asset allocation, and portfolio risk as well as help you consider if accessing margins or other borrowing options are appropriate for your objectives and overall risk tolerance.

Your Accountant

Your CPA will assist in determining tax implications associated with losses as well as any deferrals of tax payments you may be eligible for given state and county eligibility.

Your Bank

If there’s a mortgage on your property, you should contact your bank and other creditors to adjust your contact information, understand your forbearance options, and understand their process for releasing funds as a lienholder from claims paid through your insurance policy.

Additionally, be sure to check your automated bills that get paid, such as electricity or water, and adjust as needed.

The County Assessor

The county assessor should be contacted to determine if you’re eligible for a reduction in your property taxes.

Real Estate Agent

Use a real estate agent for assistance with leasing or buying. They’ll determine if you’re paying a fair price and help ensure you aren’t being taken advantage of.

Other Housing Considerations

The loss of a home is more than just the loss of housing and your possessions. It represents the loss of memories and the emotional connection to a safe space for you and your family to gather. Families will face tough decisions in the aftermath of a home loss, but the right steps and an objective assessment may help a family make the right decision for their future.  

Secure Housing

After ensuring everyone’s safety, securing temporary housing is a top priority. Look into short-term options like staying with family or friends, using emergency shelters, or utilizing Federal Emergency Management Agency (FEMA) or other assistance programs if applicable.

Short-term housing may also include rentals or hotels. Check your insurance policy for how much relocation coverage you have to assist in budgeting for your interim housing.

Evaluate Environmental Factors and Cleanup

The cost and timeline of cleanup often depend on environmental factors, such as the severity of damage, contamination, or debris removal.

Consult professionals to ensure safe and efficient cleanup. Include these expenses when planning your recovery budget. Evaluate whether preexisting health conditions may factor into your ability and desire to visit a construction site or even the long-term value of property.  

Evaluate Home Options: Rebuild or Move?

Deciding whether to rebuild or relocate is a significant decision. Evaluate factors such as the cost of rebuilding, potential future risks in the area, and the timeline for completing repairs. Consider consulting a financial planner to weigh your options and make an informed choice.

If you have children, consider their ages and emotional wellbeing. Disasters can be traumatic, especially for younger children. Prioritize creating stability and providing access to support systems, such as schools, counseling, or community programs. If rebuilding is chosen, consider the age of children at the time you’re ready to move back in. Will they have made new friends they aren’t willing to give up? Does a new school align with academic goals?

Finances

Understanding your financial position is crucial during this period. Assess your savings, emergency funds, and current expenses. You may need to reprioritize spending or explore financial assistance programs to stay afloat while recovering.

Evaluate Expenses Given a Change in Residence

If rebuilding isn’t feasible or the area poses ongoing risks, consider moving and evaluate how that move will impact your current and future spending. Explore potential new locations based on job opportunities, school quality, and environmental safety.

Work with real estate professionals and financial advisors to ensure the transition aligns with your financial goals. You also might want to consider your own family and business ecosystem, which could include:

• Health or country club
• Domestic employees and workers
• Church or other religious community
• Auto leases and mileage allowance

Assess Your Financial Instruments, Assets, and Liabilities

Reviewing your cash and current investment strategies may be necessary for short-term cash needs as well as long-term financial planning or retirement goals.

If there’s a delay in receiving insurance benefits or if insurance benefits don’t align with your long-term plan, you’ll need cash to cover your new living arrangements and to determine how it may impact your plan to retire. Financial planning and modeling can assist with reviewing scenarios to determine what is and isn’t achievable.

Assess the Impact to Your Taxes and Financial Plan

When disaster strikes, it often leaves behind not only physical devastation but also financial burdens. Fortunately, the federal tax code provides various write-offs and benefits designed to help individuals recover from the impact of state and federally declared disasters.

Understanding these tax relief options can ease some of the financial strain and help affected individuals get back on their feet. You may be able to calculate and claim casualty losses retroactively to provide access to funds as soon as possible, without a requirement to wait until your tax year is complete.

Connect with a tax advisor to help in this area, but in the meantime, maintain detailed records of damages, including photographs, receipts, and insurance claims.

Accurate documentation is critical for claiming casualty loss deductions. Remember to distinguish between deductible losses and non-deductible wear and tear.

We’re Here to Help

For assistance with financial planning, insurance claims, or long-term recovery strategies, contact your Moss Adams professional.

Additional Resources

• Private Clients Practice
• Wealth Management Services