Preparing your financial emergency kit

Marketplace Staff Sep 4, 2009

Preparing your financial emergency kit

Marketplace Staff Sep 4, 2009


TESS VIGELAND: I’ll admit it.
I was a little freaked by how close the so-called Station Fire was to my neighborhood. Six, maybe eight miles away. Nearby friends were evacuated. I like to think my family is prepared for a natural disaster to strike. We have earthquake kits. We’ve got a video of our home and all our belongings.

OK, that’s the extent of our planning. As one of those evacuated friends said, we were semi-prepared to leave the house. We weren’t at all prepared to lose it. Earlier this week we visited a Red Cross shelter at a local high school gym. Alex Mendoza is one of the shelter managers.

Alex Mendoza: Most of our clients, those who stay with us are those that have very limited resources. And those are the ones we continue to help for time to come.

Vigeland: How concerned are evacuees about financial matters versus anything else?

Mendoza: More than anything else, they are relieved that their family are OK, safe. Of course, they are concerned about the well being of their homes. But in general, no, they don’t seem to be concerned about money. Money’s like a second thought at this point.

Vigeland: What about your own preparedness? Do you feel financially you’re prepared if something were to happen to you?

Mendoza: No, never. I don’t have enough nest egg to be prepared for disaster. I’m very well prepared to have my disaster kit and I have some cash in the disaster kit, but it’s just for survival mode.

Vigeland: So would you have any advice for people who are listening to this and thinking, OK, fires in southern California, perhaps they’re in a hurricane, What is the best way to be prepared?

Mendoza: The name of the game is preparedness. Unfortunately, in a catastrophic disaster — and I mean a major hurricane or a big earthquake — it’s going to take some time to get to you. Some time ago, we were talking about be prepared to survive by yourself two, three days. Now we’re recommending two weeks.

Vigeland: Wow, that’s a big change.

Mendoza: It is a big change.

Vigeland: Thank you for your time.

Mendoza: Thank you.

Alex Mendoza talking with us outside the Red Cross emergency shelter in La Canada-Flintridge earlier this week.

Inside the shelter, we spoke with another disaster-expert. Candysse Miller is with the Insurance Information Network of California. We stood next to a cot with a small teddy bear on it and a large industrial fan blowing behind us.

Vigeland: Candysse Miller, nice to see you again.

Candysse Miller: Good to see you.

Vigeland: I’m sorry we’re here under these circumstances here at La Canada High School.

Miller: All too frequent circumstances, unfortunately.

Vigeland: It really is. So, given that it is all too frequent, how prepared are people for an event like this?

Miller: You know, I think that’s the great dichotomy of living in California. It’s not just wildfires here; it’s earthquakes, it’s flooding along the delta. We have a lot of natural perils in California. Does that raise our consciousness about preparedness or does it cause us to be a little bit more lax? It’s a little bit of both.

Vigeland: And is that mirrored nationally?

Miller: Yes, frankly is. When you’re struggling to put food on the table and hold a job and pay the mortgage, disaster preparedness very frequently is not your top priority. Unfortunately, it has to be something you think about.

Vigeland: What is the first step to take if you are deciding that, “OK, I’m finally going to do it.” I’ve seen the fires in southern California, I’ve watched what happened with Hurricane Katrina.” How do you prepare yourself financially for a disaster of these proportions?

Miller: Number one thing is don’t take that insurance policy and just tuck it off in a corner somewhere. Pull that thing out and sit down with your family and say, “Does this reflect our current needs?” We’ve talked about this before and obviously, a lot of people have gone through renovations in the last several years and the more you do that, the more you need to look at that policy and make sure it reflects your current reality.

Vigeland: Now what about something as seemingly as basic as what papers do you need to grab if you’re evacuated?

Miller: You may have heard the term “Go Kit,” “Go Box,” “Go Envelope.” And that’s the paperwork. And there’s some very basic things that you should at least have copies of in there. Things that range from your driver’s license, Social Security cards. You want to have a record of your credit cards. Your mortgage papers, if you own your home outright, get the paperwork. Granted, you can look that up, it’s better to have it.

You want your insurance policy in there, a copy of your insurance policy, particularly that very first page. It’s called a “declarations page” or “dec page.” And what that does is it spells out all your insurance coverage, all your limits. And you want to know that and you want to know your insurance policy number. So that’s a very important piece of paper to have in there.

Vigeland: Where should you keep this go envelope, this go box? Does it stay at your front door?

Miller: Well, there are a couple things to do. For example, I’ve got a couple of copies of my insurance policies out there. One is in the go box; one is in a bank box, off-side. It’s really important to keep some critical paperwork away from your home. If your home burns down and you’re not there to evacuate it, that entire go box can go with the home.

Vigeland: What about cash? How much?

Miller: Everyone’s going to have a different answer for that. You have to ask yourself what’s right for you? It’s sort of like your insurance policy. Think about an amount that’s right for you for say, 72 hours.

Vigeland: Is that 72 hours still kind of the rule of thumb? We were just speaking with the gentleman who runs this shelter and he said really since Katrina, the Red Cross has started saying two weeks.

Miller: That’s a number that’s influx. I mean, 72 hours is a standard rule of thumb, but if you think earthquakes, 72 horus may not be nearly enough. And Katrina’s a good example too. So it’s a good point. But how much cash are you comfortable carrying?

Vigeland: What about money that is afforded to you by an insurance policy? Is it necessarily about rebuilding your house, but about allowing you to live while you are homeless or not able to get to your home, not able to get your car?

Miller: Well we’re seeing that right now, of course, right here in the shelter. And that’s where additional living expense becomes relevant. That’s a part of a standard homeowner’s policy. And it does two things, generally applies everywhere, and that is, you’re under mandatory evacuation. These funds are available as part of your insurance policy for exactly what it sounds like, additional living expenses. These are the funds that help see you through that.

Vigeland: How long do they usually provide for?

Miller: That can be depending on where you are, depending on the circumstances, it can be between 12 and 24 months, typically.

Vigeland: What if you’re not a homeowner, but you’re a renter?

Miller: If you’re a renter, be sure to talk with your agent about it. Renters’ policies are similar to homeowner’s policy in their structure. So check to be sure that you do have additional living expense as part of your policy.

Vigeland: Why do you think we all don’t put as much of a priority on this as perhaps we should? Are we all just living in denial that it’s never going to happen to us?

Miller: I hate to think that it’s denial and maybe that’s it. Who wants to think about that? But you really have to, whether you live in New York City or if you live in the foothills of California, there’s going to be some risk that you face, you need to be aware of it, you need to be prepared for it, because if it’s involving your home and your family, those are the two biggest things in your life. One is probably your biggest investment and the other one is really your life.

Candysse Miller of the Insurance Information Network of California, speaking earlier this week at a Red Cross shelter set up for wildfire evacuees in the foothills north of Los Angeles.

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