How to Prepare for an Emergency

Follow these five steps now so you'll be ready if disaster strikes.

As people watch the devastation caused by the tsunami in Japan and tornadoes across the U.S., many can’t help but wonder what they’d do if disaster struck close to home. Based on conversations with survivors of all sorts of natural disasters, I’ve compiled a list of their best advice on how to prepare for an emergency. From victims of Hurricane Katrina in New Orleans, back-to-back hurricanes in Florida, California wildfires and the Midwest floods of 2008, here are some tips on preparing for the worst.

1. Create an emergency file. Store some cash, insurance policies, tax records and key contact information in a portable file you can grab-and-go if evacuated. As wildfires raged near his Los Angeles home in 2008, CPA Michael Eisenberg created a family contact list, updating key phone numbers and e-mail addresses and appointing a relative in New York City to be the contact person in case he was evacuated and wasn’t able to make calls himself (phone service can be knocked over a wide area during a disaster). Notify your insurer, your employer and key family members as soon as possible after disaster hits.

2. Build an emergency fund. This is one of the main reasons it’s important to keep three to six months of living expenses in a liquid account, such as a money-market account or a savings account, so you’ll have money to pay extra expenses during an evacuation. Keep receipts for your lodging, food and other living expenses while you’re away from home so you can seek reimbursement from your insurer. And also keep some cash on hand -- you could have a tough time finding a working ATM after a major disaster.

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3. Keep a home inventory in a safe place. Having an up-to-date inventory of the contents of your home can help speed the payment of an insurance claim. It’s much easier to make an inventory of everything you own before a disaster, rather than trying to remember what you had while you’re still in shock. Take pictures or video of your belongings so that you can compare the “before” shots with pictures of the damage after a disaster. Keep one copy in your portable emergency box and another copy far away from home -- either online or mail a photo disk to a relative in another city. Quite a few people who kept their home inventories in their offices or bank safe-deposit boxes lost the copies when their offices and banks were flooded during Hurricane Katrina. See the insurance section of our Quick & Easy Financial Fixes for help with creating your home inventory.

4. Review your insurance coverage. Go to to calculate how much insurance you should have to cover the cost of rebuilding your home (the service costs $7.95). Even though market values have decreased for many homes, rebuilding costs have not (see Save Money on Homeowners Insurance for details). Update your insurance coverage if you’ve done any major home improvements. And consider getting extra coverage for risks that aren’t covered by a homeowners insurance policy, such as flooding. See Prepare for Storm Season With Flood Coverage for more information about flood insurance, and see Cameron Huddleston’s KipTip Make Sure You’re Covered if Disaster Strikes for more information about coverage for earthquakes.

5. If you do have an insurance claim, learn from people who have experienced the process themselves. In Insurance Lessons After Katrina, I talked with many people in the aftermath of the hurricane about the steps they took in those first few weeks to deal with the disaster and start the claims process. Nine months later I traveled to New Orleans and Bay St. Louis, Miss., to meet with them again -- many of their claims had been paid promptly while others were still fighting with their insurers. I wrote an article about their experiences to show which strategies helped and what they could have done differently (see Make Your Insurer Pay). Also see Lessons From the Floods for stories of people whose homes were damaged in the Midwest floods of 2008, their experiences with insurance claims and federal aid, and the complex issues that arise from flood damage.

For more advice about preparing for a disaster, see Your Essential Emergency Kit and 7 Must-Have Items for Your Emergency Kit for tech items that can help you be prepared.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.