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Too Many Clients Underestimate Their Flood Risk

Over the span of several days in late August, I was consumed with the news coverage of Hurricane Harvey and its impact on the Houston area. I was especially concerned about the devastation because I called Houston home for nearly nine years. Therefore, I was personally aware of how easily the area can flood after a heavy downpour, let alone after a hurricane. I’ve often said that, having been born and raised in Philadelphia, I will gladly take a blizzard over a hurricane any day.
At the time I wrote this column, at least two additional named hurricanes were building strength. One of them — Irma — ended up being even more powerful and devastating than Harvey. 
You can imagine my anxiety as reports showed countless families being rescued from their homes with just the clothes on their backs. Some were even barefoot. The image that circulated on social media of the elderly women in the nursing home sitting calmly in waist-deep water waiting to be evacuated was just one of many examples of how vulnerable people were during the storm. 
It was heartbreaking to watch the devastation unfold in real time and hear the countless number of stories of people who lost their homes, cars and possessions. What was even more devastating is learning that only 20 percent of properties in Houston were covered by flood insurance, according to the Federal Emergency Management Agency (FEMA). 
Rebuilding will be long and expensive because tens of thousands of homes were impacted. It is estimated that damages will be more than $160 billion, making Harvey the most expensive natural disaster in U.S. history. This surpasses the damage from Hurricane Katrina and Superstorm Sandy. 
As people slowly begin to return to their homes to assess the damage and start the long rebuilding process, these are a few of my thoughts.
Now is a good time to sit down with clients and complete an insurance review that includes property and casualty coverage. Far too many people still believe that flooding is covered under their homeowners or renters insurance policy. Flooding is the most common natural disaster. It occurs more often than we realize and not only in flood zones. Additionally, clients who own artwork or other collectibles should be sure to have these items properly appraised and listed on their insurance. 
Re-evaluate or establish backup recovery plans to determine how they will access files in the event they are displaced from our homes or offices.
Many online tools are currently available to store documents securely. In 2007, I became a believer in eMoney’s Vault after reading an article about an advisor in Louisiana who encouraged his clients to set up their personal websites on the system and upload documents. As a result, his clients who were unable to get back to their homes after Katrina could access insurance policies and other important documents from wherever the clients were. 
Including a household inventory is also important. This is a detailed list of major household items that includes a photo, date of purchase, cost (receipt if available) and serial number for major appliances such as a refrigerator or washer/dryer. This information will be extremely helpful for any insurance claims. 
Emphasize the importance of maintaining an emergency fund and/or having access to a line of credit. This could provide the resources for temporary shelter if clients are displaced. It’s also a way for clients to access essential funds needed to begin repairing and replacing lost and damaged items.
For advisors who have clients impacted by the storm, be sure to reach out to them early and often. Being a resource for information on such things as how to file a claim with FEMA or how to request a distribution from their accounts can be especially helpful. Other ways to help may be volunteering your time or talent to assist those in need.
Let this year’s hurricanes be a reminder that natural disasters have no regard for race, religion or political affiliation. I pray that the selflessness and compassion that we see being demonstrated by neighbors and even complete strangers lasts longer than the current news cycle. Material possessions can be replaced but people cannot. 

Jocelyn Wright is the chair of The State Farm Center for Women and Financial Services at The American College. Jocelyn may be contacted at [email protected] .

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