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Home Insurance

When Disaster Is at Your Doorstep

What the California wildfires can teach you about protecting your possessions.

As wildfires raged near his Los Angeles home, CPA Michael Eisenberg finally created a family contact list. "We updated phone and fax numbers and e-mail addresses, and appointed a relative in New York City to be the contact person." That way, says Eisenberg, there'd be someone who could relay information to the rest of the family.

Derek Ross, an insurance agent in Woodland Hills, Cal., took photos and updated an inventory of items in his home. Then he took the precaution of e-mailing a copy of the inventory to a sister in Florida. He says handing a photo disc to an adjuster is easier than having to remember everything you've lost -- and your claim will be processed faster.

Having experienced the wildfires of 2003 and 2007 -- and counseled clients who were evacuated or lost their homes -- Eisenberg and Ross are doubly qualified to give advice on how to prepare for a disaster. They recommend that you also take the following steps:

Make sure you have enough homeowners insurance. In 2003, many Californians discovered that they didn't have sufficient coverage to rebuild their homes.

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If you've made major home improvements, let your insurer know right away. Most insurers limit coverage to 125% to 150% of the insured amount, which might not be enough to cover the rising cost of building materials. AccuCoverage.com lets you access the same replacement-cost estimates that insurers use (the service costs $7.95).

Build an emergency fund. Eisenberg used to recommend keeping three to six months of living expenses in reserve. Now, he says, "if you have enough money to tide you over for six months to a year, you can make better decisions."

If you're evacuated, call your insurance agent immediately. Last fall, some insurers made arrangements for California policyholders to stay in local hotels.

Keep receipts for your lodging, food and other living expenses while you're away from home. Your insurer will reimburse you. And if worst comes to worst, "put in your claim, get the ball rolling, and get the adjuster's name and contact information," says Ross.

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Let your employer and lenders know where you are. Eisenberg says that some employees received advances, and some lenders extended deadlines or set up flexible payment programs for people in disaster areas.

Take advantage of tax breaks. You can deduct casualty losses on your income-tax return that aren't reimbursed by insurance. To qualify, you must subtract $100 plus 10% of your adjusted gross income from the unreimbursed loss (go to www.irs.gov for details).