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Recover financially from Sandy

By Kemberley Washington · Bankrate.com
Monday, November 5, 2012
Posted: 3 pm ET

Hurricane Katrina taught me to be ready financially for whatever tomorrow may bring. In a mere moment, I lost my home, personal belongings, car and everything I ever owned.

But after it was over, I was able to recover financially. If Superstorm Sandy has affected you, follow these steps on your road to financial recovery.

Lesson learned: Be prepared

The day before leaving for Katrina, I only took a few items and assumed I would return within days.

Now, I do not take my evacuation trips for granted. Before evacuating, I use a financial disaster checklist, such as the one found on my website, Kemberley.com. It includes items I need to take with me, such as tax returns, insurance documents, resumes and birth certificates.

I also review insurance policies more frequently and update beneficiaries on financial accounts in case the unlikely occurs. I also keep financial records organized and eliminate unnecessary paperwork.

Optimizing your insurance claim

Before filing your claim, make a list of all personal items lost in the disaster. If your items have been destroyed, take your time to recall what was in each room.

The Internal Revenue Service provides a publication, "Casualty, Disaster, and Theft Loss Workbook," that is a great tool to help you recall items. This information can assist you not only in filing an insurance claim, but also in amending your tax return.

Don’t take no for an answer

After Hurricane Katrina, my homeowners insurance company denied my coverage, stating that because of the rising waters, it was not responsible for any damages. But while there was flood damage -- which typically is not covered by homeowners insurance -- there were also damages that should have been covered by my homeowners policy.

I decided to discuss my case with an attorney. After filing suit, I was able to get the coverage to which I was entitled from my insurance company.

What to do if you do not have insurance

If you do not have insurance, or have uncovered insurance losses, the Federal Emergency Management Agency, or FEMA, provides financial disaster assistance to individuals affected by a federally declared disaster. This includes assistance with housing, disaster-related medical expenses, moving costs and other expenses.

For short-term cash, amend your tax return

If Superstorm Sandy or any natural disaster has affected you, you may be able to claim the loss on your federal income tax return.

In addition, if you reside in a federally disaster declared area, you can amend a prior year's tax return to claim your loss. By doing so, you do not have to wait until tax time to claim your loss; thus, you will get your money faster. Taxpayers claiming losses are required to file a form 1040X, Amended U.S. Individual Tax Return.

Reconstruct your financial records

Make sure you have fast access to your financial records after a natural disaster. If you evacuate, there will be many instances where you need to provide certain financial documents.

If your records have been destroyed, use a financial disaster checklist so you can recall which companies to contact in order to obtain a copy of your documents.

Remember: your choice, your future!

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