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Using home insurance for disaster assistance

Tree branch damaging roof of house.

Both 2021 and 2020 saw more billion-dollar natural disasters than any previous year on record according to the National Oceanic and Atmospheric Administration (NOAA). Most recently, 2022 threeway-tied (with 2017 and 2011) for the third-highest number of billion-dollar natural disasters on record, with 18 separate qualifying events. As natural disasters continue to occur with increasing frequency and severity, preparation for these events is key. Ensuring that your home is covered by a home insurance policy that covers the risk of natural disasters won’t stop a disaster from happening, but it can ensure that you are financially protected and able to repair and rebuild as needed. Bankrate shares what you should look for.

2023 Statistics on Disaster Assistance

Insurance Home
  • 2022 saw $165 billion in damages from natural disasters, the third-highest of any other year. (National Oceanic and Atmospheric Administration)
  • In 2022, the U.S. saw 18 weather disasters, compared to only 7.9 annual billion-dollar disasters since 1980. (NOAA)
  • In 2020 and 2021, the U.S. experienced record-setting levels of billion dollar weather disasters, with 22 and 20 respectively. (NOAA)
  • Between 1980 and 2020, the South, Central and Southeast regions of the U.S. experienced a higher frequency of billion-dollar weather disasters than any other regions. (NOAA)
  • Tropical cyclones are the most damaging natural disasters, averaging $22.2 billion in damage per event. (NOAA)
  • The most expensive natural disaster in the history of the U.S. was Hurricane Katrina, which cost more than $89 billion. (Newsweek)
  • Home emergency spending and repairs averaged $1,953 per household in 2021 according to home services site Angi. (Angi)
  • An inch of water in your home can cause $25,000 of damage. (Federal Emergency Management Agency)
  • Texas had 137 natural disasters in the last 40 years, the most of any state. Damage cost between $200 and $340 billion. (Spectrum News)

Using home insurance for disaster assistance

“As many communities continue to recover from numerous natural disasters that impacted the U.S. in 2022 – including hurricanes, tornadoes, wildfires and floods – it shows the importance of making sure you are financially protected from devastating property losses. This starts with having the right level of replacement cost coverage for your home (dwelling coverage or Coverage A),” said Insurance Information Institute’s (Triple-I) Director of Corporate Communications Mark Friedlander.

Replacement costs are running nearly double the U.S. Consumer Price Index, meaning it may cost 15 percent or more to replace your home today compared to just a year ago due to the rising costs of construction materials and labor. Additionally, based on the catastrophic flooding incurred in many parts of the country this year, we encourage all homeowners to consider flood insurance regardless of whether you live in a designated FEMA floodplain. As we have seen, 90% of natural disasters involve flooding and most Americans (only 4% have flood insurance nationally) are not protected from this common hazard.

— Mark FriedlanderTriple-I

Friedlander goes on to say, “We strongly recommend homeowners conduct an annual review of their insurance coverage with their agent to ensure they have the right amounts and types of property insurance, close any gaps, and take steps to prevent a catastrophic financial loss from the wrath of Mother Nature.”

If you experience a loss that is covered by your home insurance policy, you can submit a claim, and you’ll be reimbursed up to your policy limits. In most cases, insurance will cover home improvements after a disaster — at least in part, assuming you have appropriate coverage.

You may wonder if after a home disaster you can just keep the insurance money and not rebuild. Generally, claim checks are required to be used toward their intended purpose of repairs or rebuilding, and not doing so could cause issues with future claims being approved. However, you may be able to keep leftover funds if the costs end up being less than what your insurer issued. If you are still paying a mortgage, your lender will likely be included as a co-payee on the check to protect their financial investment.

Do you have to file a claim after a natural disaster?

Depending on the extent of damage you experience after a natural disaster, you may not decide to file a claim in every case. Because filing claims usually lead to increased premiums based on risk, you may wonder what your home insurance premium will be after damage from a disaster is not fixed. If you avoid filing a claim, your premium should be unaffected. However, if you have still not made necessary repairs out of pocket by renewal time, your home may still be viewed as high risk by your insurer, potentially causing a premium increase.

Home insurance policies can help pay for damages that are covered under your policy. However, after large natural disasters, claims may take longer to be paid out due to heightened demand. If your home repairs aren’t completely covered by standard home insurance, there are several ways you could get financing for disaster relief.

Flood insurance

Flood insurance typically isn’t included under a standard home insurance policy, so if you live in a flood-prone area, you may want to purchase a separate flood insurance policy. Flood damage can cost up to $7 per square foot to repair, so having flood insurance could pay off after a natural disaster.

Flood insurance typically covers the structure of your home, built-in appliances, attached structures, clothing, home decor, and personal belongings up to your policy limits.

Other extended policies

Depending on where you live, you may want to consider policy endorsements that provide coverage for a variety of disasters.

  • Wildfire coverage: Some home insurance policies include coverage for wildfires, but others require you to purchase additional coverage
  • Earthquake coverage: If you live in an earthquake zone, you may want to purchase this endorsement, since it’s typically excluded from home insurance policies.
  • Windstorm coverage: Most wind damage is covered by standard home insurance policies. However, in some parts of the country, you’re more likely to have to purchase a windstorm endorsement.

Other ways to get financing for disaster assistance

If you need additional assistance paying for home repairs after a disaster, you may want to look into the following options.

  • U.S. SBA loans: SBA loans are backed by the federal government and can be used for remodeling and home improvement.
  • FEMA programs: FEMA offers home repair and home replacement services to individuals with unlivable or damaged homes following a disaster.
  • Personal loan: Personal loans are typically easy to apply for from banks, credit unions or virtual lenders. Often, you can apply for a loan and have the funds available the next day. You just need to show proof of income and employment, proving that you have good job history and can repay the loan.
  • Home equity loan: Home equity loans are typically available in larger sums than personal loans since they are secured against the equity you have in your home.
  • Crowdfunding: If you need help paying for damages following a disaster, you could seek financial support from friends, family and others who want to contribute to your efforts. Platforms like GofundMe are often used to fundraise disaster relief for organizations and individuals.

Average cost of popular home repairs needed because of disasters

Home repairs Cause Average cost
Fire and smoke damage Wildfires Between $2,500 and $5,000
Siding damage Heavy winds, cyclones, hurricanes Between $352 and $1,424
Flooding and water damage Heavy rains Between $1,307 and $5,748
Window damage Heavy winds, wildfires, cyclones, hurricanes Between $180 and $409 per window
Sidewalk or patio damage Heavy winds, wildfires, cyclones, hurricanes $2 to $25 per square foot
Roof damage Heavy winds, winter storm, wildfires, cyclones, hurricanes Between $379 and $1,755
Frozen pipes Winter storm Between $150 and $205

Note that the cost of repairing each issue differs based on severity of the damage and the type of materials needed. For instance, light flooding could be fixed with a shop vac and airing out the place, while severe flooding could require a full remodel. If you’re repairing vinyl siding, the job could cost as little as $400 to repair 200 square feet, while repairing the same square footage of brickwork could cost $600 at minimum, according to HomeAdvisor.

Frequently asked questions

    • A natural disaster is a type of severe weather with the potential to pose a serious threat to human health and safety, property, and infrastructure.
    • Home insurance can protect your finances. But to protect your home and possessions, you may want to reinforce doors and windows, use sandbags to divert water, secure outdoor furniture, prune large trees, secure heavy furniture to your walls, look for fire-retardant plants and create an emergency plan.
    • Hurricanes are generally the most expensive natural disasters. The most expensive natural disaster in history was Hurricane Katrina, which cost more than $89 billion.
    • If you don’t pay back a home equity loan on time, your lender could foreclose on your home and you could lose it.
    • It is becoming increasingly common for insurance providers to choose to nonrenew insurance policies for properties deemed to be in a disaster-prone area. It is legal for an insurance provider to drop your coverage at any time based on the risk factors associated with your property’s location, as long as it provides the required upfront notice in accordance with state law. Check your policy to see what conditions allow your insurance provider to cancel your coverage and check for any laws within your state that may protect you from losing coverage.

      If your coverage is dropped, shop around and compare policies from home insurance providers offering coverage in your area.

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