Recovery and Rebuilding

Money Matters

Once you've met the most basic needs like food, water, and shelter, often the biggest need after a disaster is for money – and a lot of it. The following is your roadmap to tapping the resources available to you.

Dealing With Your Insurance Company

The first place you should turn for financial help after a disaster is your insurance company. We devoted a lot of space to helping you evaluate your insurance policy specifically so it would be there now when you need it most. All policies have provisions that pay out immediately for additional livings expenses (ALE), like money for meals, hotels, and temporary housing, if you've been forced from your home. The money to repair the damage to your home can take somewhat longer, but ideally should kick in within TK to TK weeks. Unfortunately, sometimes even if you've taken all the necessary precaution, the process can bog down for much longer than that. One thing you need to watch out for that when your insurance company does offer to settle your claim, it's enough to cover the necessary repairs. Try to get a reputable contractor walk the site and tell you whether he believes he can do the job for that amount. If that's not possible (often after a major disaster contractors are in short supply), you can hire your own insurance expert, known as a "public adjustor," to counter the insurance company's offer with a detailed estimate of your own. The insurance commissioner's office, accountants, and independent insurance agents can all help with referrals; public adjustors usually charge a flat fee of around $300.

In general, be firm in dealing with your company. Don't be so quick to take a "no" for an answer; insurers are famous for testing their customers. And if you feel your claim has been denied unfairly or you're being low-balled, you may want to consider hiring an attorney.

Need An Accountant?

Some of the financial issues that arise after disaster really aren't for amateurs. If you need an accountant to help you sort through your morass of paperwork, the American Institute of Certified Public Accountants has a comprehensive database of so-called Personal Financial Specialists specifically trained to advise you at times like these. After major disasters, the AICPA also establishes phone banks and sets up booths in Red Cross Centers to dispense free advice.

Applying for FEMA Assistance

As part of the federal aid for Presidential Disaster Zones, the Federal Emergency Management Agency has funds set aside to help people without insurance, with too little insurance, or with an insurance company that is either delaying on contesting the payment of its claim. If any of those describe your situation and a Disaster Zone has been declared for your area, you should apply to FEMA for assistance. You can pick up an application form in person along with a copy of "Help After a Disaster: Applicant's Guide to the Idividuals and Households Program" at any FEMA Recovery Center. Or you can apply online.

FEMA's aid essentially falls into two main categories. Its first, and primary, area of responsibility is to reimburse you for temporary living expenses, such as rent and meals. Depending on which market you live in, the agency usually caps such grants to $27,000 per family.

FEMA may also provide some money to repair the damages to your home and possessions. Its assistance in this area, though, is only intended to fill in the gaps left by another important government resource, known as the Small Business Administration (SBA) Disaster Loan Program. BUT – and this important – YOU CANNOT APPLY FOR AN SBA DISASTER LOAN UNTIL YOU REGISTER WITH FEMA. FEMA and the SBA take this requirement VERY seriously. (In fact, the SBA website doesn't even mention the Disaster Loan Program for private homeowners and renters.) After you file your FEMA application, FEMA will refer your case to the SBA and you'll receive an SBA loan application in the mail. Alternatively, after you file, you can pick up a copy of the SBA loan application at a FEMA Recovery Center or by calling 1-800-659-2955.

The following links at fema.gov should answer most of the other questions you have.

More Help FEMA

FEMA also runs a pair of web portals that can link you to resources in two other important areas. One lists other government agencies that may be able to provide assistance. Another lists available below-market temporary housing in your area.

Solving the SBA Loan Puzzle

Many disaster victims are eligible for low-interest loans from the Small Business Administration. Homeowners can apply for Real Property Loans of up to $200,000 to repair damages to their homes; and homeowners or renters can get up to $40,000 in Personal Property Loans to repair or replace items like furniture, cars, and appliances. So how low is "low"? SBA rates are currently running as low as 3 percent, but you should be warned: the application process is not for the faint of heart. Any number of issues – from the amount and timing of your insurance settlement to the attitude taken by your mortgage company about the status of its loan – can threaten to derail the process and leave you suffering through numerous frustrating phone calls as you attempt to sort things out. Try to hang in there. Despite the hassles, a $200,000 30-year fixed-rate 2.6 percent loan is still a fantastic deal that can go a long way toward putting you and your family back on more solid financial footing.

Hitting Up the IRS

Many disaster victims don't realize that there are tax provisions specifically designed to help them deal with insurance and cash-flow shortfalls. According to the federal tax code, anyone who lives in a Presidential Disaster Zone can withdraw money from their 401k without any tax penalties, as long as it's paid back within 60 days. Furthermore, those same people can file an amended tax return to reflect uninsured damages to their property. For the average family in such a situation, the added amount they receive back from the IRS may total $40,000 or more. Ask your accountant for help in filing your amended return, and if you need an accountant check out the convenient database of Personal Financial Specialists run by the American Institute of Certified Public Accountants.