Oran Hall | The path to financial recovery after a natural disaster

Hurricane Melissa has come and gone, but she will not be forgotten because of the life-changing effects she has inflicted on a significant portion of the Jamaican population. Eventually, each victim will have to embark on a path leading to recovery.

I am very fortunate not to have been a victim and empathise with those on whom Melissa has inflicted losses. I hope that I can assist my readers who have suffered loss and the people they relate to who have had a similar experience to begin to set the course that will lead to full recovery. While recovery for some might come quickly, for others, it might take a long time, but, in any case, in light of the setback, a serious question should be: What next?

An initial step to take is to replace vital documents that have been damaged or taken by the breeze or water – identification cards, insurance documents, bank documents and banking information, wills, and documents showing ownership of assets, for example. It will be easier to get replacements for some than for others, but it is important to have them to be able to do business and attend to some regular day-to-day activities.

It is important to develop a plan to repair or replace damaged or lost assets. If there are personal resources to do this, or there is insurance from which a payout will come, all the better. Barring these sources, consideration has to be given to where the funding will come from, for example, commercial loans if there is the capacity to take this route.

It can be useful to contact creditors to arrange, if they are willing, payment relief for, or extension of loans and mortgage payments, for example.

Managing money becomes a premium skill in situations like this. Spending priorities might have to change with funds being re-directed to the replacement or repair of assets, funding temporary living accommodation, temporary travelling arrangements, even food, considering that food can be lost or spoiled in such unsettled situations. It is also important to prioritise essential bills and eliminate non-essential items. Even if a temporary change of lifestyle becomes necessary, continuing to save or to re-build savings must remain a priority.

Although this is far from ideal, more liquid investments can be liquidated to fill the void, if there is no financial safety kit or if it is inadequate, but such funds should be treated as a personal loan, meaning it should be repaid when the situation improves in order to restore the portfolio.

Insurance is a significant source of funds in addressing losses inflicted by natural disasters. It is good practice to contact the insurance company and report the damage early. Before doing so, it is best to understand what the policy covers, the sum insured, and how the claims process works. If necessary, ask a representative of the company for guidance.

Having clear, high-quality photographs of the damaged property from several angles, including close-ups, can provide useful detail. Having photographs of your assets that were taken before the damage can also be useful in establishing the extent of the damage.

Having an inventory of the insured items, including the description, the insured value, serial and model numbers is useful when making a claim relating to items that have been destroyed or damaged. Of importance too is insuring assets for their replacement cost.

It is also helpful to keep copies of all correspondence with the insurance company and contractors to follow up progress without being a bother. Where inspections are being done, it is important to be present to point out any damage and offer any explanations where necessary.

Transferring risk through insurance is the ideal way to restore a person’s financial situation after a natural disaster, but even that can fall short in the case of inadequate coverage. If the risk is not transferred, the burden of restoration falls fully on the owner, be it a residential or commercial building, a motor car, furniture and the various items which are used to make a residence comfortable.

The people with limited means among us might not be in a position to fall back on savings, investments, insurance, and loans to begin the process of restoration. They, to a great degree, must depend on the government programmes which offer relief, as well as non-governmental organisations, relatives, and organisations like churches, and the little they themselves have to begin the process of recovery.

Natural disasters, like hurricanes and earthquakes, can cause serious financial harm and set back the achievement of important goals. It does not mean that goals have to be abandoned, and sometimes they present opportunities to develop different paths to achieve the same or a more meaningful result.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com