We are now in what many experts consider to be the peak of the annual hurricane season, which runs from June through November. Earlier this month, Hurricane Dorian offered a reminder of the destructive power of a major hurricane when the Category 5 storm battered the Bahamas with winds as high as 185 miles per hour for two full days.
Unfortunately, Dorian probably won’t be the last major storm we see this year – scientists believe that we could see more Category 4 and 5 hurricanes not only this season, but also in the years to come. Given this, it’s important to understand how to file a hurricane insurance claim if you are living in an at-risk area. Let’s take a look at the overall impact hurricanes can have on the economy, and then we’ll dive into how to file a claim if your property is damaged.
Direct Damage and Impacts of Hurricanes on the Economy
Not only do major hurricanes like Dorian, Michael and Maria cause billions of dollars in damage to the areas where they come ashore, but they can also impact the national economy. For example, consider that 40 percent of jobs in the U.S. are located in coastal areas which generate 46 percent of national GDP. A Category 4 or 5 hurricane can temporarily lower GDP, boost the unemployment rate and even depress the stock market.
On a more micro level, about 1.2 million people now live in coastal areas that are considered to be at risk of substantial damage from hurricanes, according to the Congressional Budget Office (CBO). Most of these coastal areas are less than 10 feet above sea level, which makes them extremely vulnerable to flooding and storm surge.
By 2075, the number of people living in coastal areas with a high risk of hurricane damage is projected to rise from 1.2 million to 10 million people, or 2.1 percent of the total U.S. population, according to the CBO.
The total annual costs attributable to hurricane damage are pegged at $28 billion a year, or 0.16 percent of GDP, according to the CBO. In addition to this, the federal government spends another $18 billion in relief and recovery related to hurricane damage. However, these costs are projected to rise to $39 billion a year (in current dollars) by 2075, or 0.22 percent of GDP, with another $24 billion spent by the federal government on hurricane relief and recovery.
About 55 percent of this rise in hurricane-related spending costs will be due to more coastal development while the remainder will be due to climate change, the CBO projects.
Six out of every 10 dollars spent on hurricane damage, relief, and recovery is spent by the federal government. About two-thirds of this money comes from the Federal Emergency Management Agency (FEMA) and the rest is spent by the Department of Housing and Urban Development and the U.S. Army Corps of Engineers.
How to File a Hurricane Insurance Claim
If you suffer property damage as a result of a hurricane, you should contact your insurer right away so you can start documenting your claim as soon as possible. Be sure to take photographs of the damage before making any temporary repairs, such as installing a tarp on the roof to prevent more water damage to your home. And don’t forget to keep receipts for anything you buy to make these kinds of repairs, since your insurer might reimburse you for them.
The best way to document hurricane damage claims is to create an inventory of all of your possessions before the storm strikes, preferable by taking photos or video of your possessions. These photos and video should be stored outside of your home so they aren’t damaged by the storm, such as on a mobile device or in the cloud.
It’s important to be aware of what kinds of hurricane damage are and aren’t covered by your insurance. For example, most homeowner’s insurance policies do not cover damage caused by flooding or storm surge. Instead, they only cover damage caused by wind and wind-driven rain. Many homeowners in Houston, Texas, learned this the hard way when they found out that damage caused by flooding from Hurricane Harvey in 2017 was not covered by their homeowner’s policies.
Note that if you have comprehensive auto insurance, this will usually cover flooding of your vehicle. Also, there may be a higher deductible for hurricane-related damage to your home than for non-hurricane-related claims.
If you live in an area considered to be at risk of substantial damage from hurricanes, it might be wise to consider purchasing a separate flood insurance policy. Talk to your insurance agent or visit FloodSmart.gov, the National Flood Insurance Program, to learn more about the flood risks you might face in a hurricane.
Also look into whether your homeowner’s insurance will help pay additional living expenses you incur if you’re unable to live in your home while it’s being repaired after a hurricane. Many policies pay these expenses for a certain period of time or up to a percentage of the total coverage amount. Additional living expenses can add up to tens of thousands of dollars if you can’t return to your home for an extended period of time, so this kind of coverage can prove to be extremely valuable.
Start Financial Preparations Now for Hurricanes and Other Natural Disasters
Now would be a good time to take a close look at your homeowner’s insurance policy to determine the specifics of your hurricane coverage and create a video or photo inventory of all your possessions. This is smart even if you don’t live in a coastal area — because hurricanes aren’t the only possible source of major damage to your home and possessions.
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