To some, it might seem like an impossibility. How can you really plan for an act of nature? Actually, no one can truly know how storms and other weather-related disasters can affect their lives until they happen.
"In fair weather prepare for foul.”—Thomas Fuller
To some, it might seem like an impossibility. How can you really plan for an act of nature? Actually, no one can truly know how storms and other weather-related disasters can affect their lives until they happen. But as we approach the third anniversary of Hurricane Katrina, it’s appropriate for Americans to think how an angry Mother Nature could affect them.
Here are some key planning ideas that will help you and your family emerge more effectively from any weather-related disaster:
• Call your insurance agents. We say agents in case you deal with more than one agent for home, life, health, auto and business coverage. Talk to them about whether they feel your coverage is adequate based on any number of emergency scenarios. If you had a huge medical bill, could you pay your deductible and any uncovered costs out of your own reserve funds? How’s your life insurance for you and your spouse? Is your home insurance based on the highest replacement value figures for your neighborhood? If you are in a designated flood area, is your insurance up to date? While you’re at it, see if your insurance will cover temporary relocation and car replacement if you need it.
• Make sure your reserve fund is healthy. Think of all the people on the Gulf Coast who are still living in government-provided trailers and still fighting with their insurance companies. That may not be your situation, but if you had to temporarily relocate, could you handle the expense until your insurance funds arrived? Could you continue to pay your mortgage if a storm knocked out your place of business as well? Weather disasters usually mean huge cash flow disasters as well.
• Develop a “what if” list. Be as imaginative and as negative as possible about this. Consider every possible event that could hurt you, your family, your home or your business—what hurts one automatically hurts the other. The first question—what if you died or became disabled tomorrow? Could your family continue to support themselves while they worked through the aftermath? A good way to make the list is to draw a line down the middle and on the left side list every possible risk, while writing every possible remedy for those risks on the right side.
• Set contingencies in motion. If you had to relocate to a particular relative’s home, does that relative know you’d be knocking on his or her door? Would all your family members know where to meet if you were separated? Close the loop with all friends, family and service providers you’d need for support if you had to rely on them—and set up an effective communications plan to go into effect the moment trouble happens.
• Plan an escape kit. If you had to leave home within 2-3 hours, what would you take? Key financial and insurance documents would be a must, but you might consider consolidating all that paperwork in one place for speedy packing. Also, it might make sense for all family members to make a list of things they’d pack in a hurry as well—put a time on your calendar each year for everyone to update their list. If you have financial or work data on computers, it’s important to regularly back up that data on separate drives that could be packed up and downloaded to a portable laptop offsite. Also, don’t forget to plan for your pets if you have them—they’ll need their supply of food, toys and medication if necessary.
• In business, protect yourself first. If you’re a good boss, you care about your employees and your customers, and we’ll get to them in a moment. But the first step in a business disaster plan is to review your list of worst-case scenarios and review how you would protect your home, your health, your retirement, your kids’ education and your estate priorities first. If your business fails for any reason, all of those critical necessities could be jeopardized. Make sure you have appropriate life and disability insurance coverage in addition to a current estate plan.
• Protect your employees second. In a natural or man-made disaster, lives can be lost. But if you’re closed for weeks or months, key employees may leave and that might be a greater long-term danger to your company. Talk to your insurance company about every physical and employment risk your staff could face in a disaster and see what safety nets are available.
• Protect your customers third. If you faced a lengthy business interruption, how would you serve the customers who are depending on you? Are there specific customer service and inventory procedures in place to keep them informed, supplied, and most important, loyal once you’re up and running again? Do you have options for alternate office and production space as well as resources for temporary workers?
• Protect your information. You don’t have to be some high-tech firm to understand the value of proprietary information that keeps your company running. From proprietary databases and research to customer credit information, these data are critical for your business. What’s to keep a burglar from stealing your computers and taking all your valuable financial, inventory and customer data with them? Better yet, what’s to keep a computer hacker from stealing the information and leaving the machines behind? Data security and backup procedures are increasingly important as disaster-planning priorities. Get help finding the protective measures that fit your industry.
This column is provided by the Financial Planning Association, which has over 100 chapters nationwide representing more than 28,000 members involved in all facets of providing financial planning services.