If, for example, you are going to be paid for your house in a buyout plan, any money you receive from a flood-insurance settlement will be subtracted from the buyout price. You can claim a tax deduction for an uninsured personal-property loss, but not for the full amount. Generally, you can claim the deduction in the year that a flood or other natural disaster occurs. If, however, you live in a place that has been declared a disaster area by the President, you can elect to deduct the loss for the preceding year. Because tax forms, insurance claims and applications for government loans may require you to list property losses in detail, accurate and complete information is vital for getting adequate financial relief.
Records are often destroyed in a disaster, so take precautions ahead of time.
That means making a list of what you own, as well as when you bought it, and how much you paid. It's also important to get an appraisal for special items, such as antiques or artwork, especially if you want to make sure they're adequately insured. Finally, make a videotape of your house and everything in it. Store the tape, along with the inventory and copies of the appraisals, in a safe-deposit box at a bank in another town, or possibly even in another state. Should a disaster strike close to home, your bank could be a casualty as well.