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Protecting your finances after disaster strikes
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"If you have to go back for more money, it's a very tough negotiation."

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If you'll have to wait for the repair work to be done because of high demand, you'll want to discuss this with your claims adjuster. The cost of materials can easily escalate after a disaster, thus increasing the cost of the repair work. As an example, Welch says the price of lumber may jump because of a surge in demand. Even higher fuel prices can increase your repair costs.

Be sure to keep all correspondence from the insurance company and make notes when speaking with the adjuster -- including the adjuster's name and the date of each conversation. Don't hesitate to go over the adjuster's head to a higher level of official if you feel the settlement offer is too low. If the adjuster makes a visit to your property, be sure you or a trusted adviser is there to work with the adjuster.

If you're having a problem with your insurance company that you are unable to resolve, you can contact your state's department of insurance. There is a policyholder's service section in most Commissioner of Insurance offices.

5. Develop a financial strategy
If you've received a settlement check and you're still waiting for the repair work to be done, make sure to isolate the check in a separate account.

"Don't co-mingle the insurance check with your holiday money. All you'll get is a lot of great presents, but no money to make the repairs on your home," says Welch.

If your insurance proceeds don't cover your costs and you've used up your emergency reserves, there are other options for obtaining the money to make necessary repairs.

"If you have a life insurance policy with a cash value, you can borrow against it," suggests Alan Goldfarb, a certified financial planner in Dallas.

You can also borrow against your brokerage account.

"With some exceptions, the law allows you to borrow up to 50 percent of the current fair market value of your account on your signature. But you want to set up your ability to borrow in advance. It's called a margin loan and it's like a line of credit. You don't have to use it, but it's there if you need it," says Goldfarb, who suggests speaking with your stock broker who can advise you how to do this.

Another source of emergency funds is your retirement account.

"A lot of 401(k) accounts allow for borrowing for emergency use," says Goldfarb.

And when you pay it back, you'll be paying it back to yourself.

If your house is still standing, you can also use a home equity loan to get the needed cash for disaster repairs.

But try to avoid using high-interest credit cards to finance the repair work, caution the experts. It's too costly.'s corrections policy -- Posted: March 29, 2006
More stories by Ellen Goodstein
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