Using home insurance for disaster assistance
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2020 and 2021 saw more billion-dollar natural disasters than any previous year on record. With natural disasters increasing in frequency and severity, you may be wondering how you can prepare. Making sure you have solid home insurance and understand your policy can be a great way to start. The right home insurance policy can help protect your finances when you need significant home repairs after a natural disaster.
2022 Statistics on Disaster Assistance
- Damages from natural disasters totaled around $145 billion in 2021. (National Oceanic and Atmospheric Administration)
- Between 1980 and 2020, the South, Southeast and Central regions of the United States experienced a higher frequency of billion-dollar weather disasters than any other regions. (NOAA)
- In 2021, the United States saw 20 weather disasters, compared to only 7.4 annual billion-dollar disasters since 1980. (NOAA)
- The first six months of 2022 saw nine natural disasters that resulted in at least one billion dollars of damage. (NOAA)
- Tropical cyclones are the most damaging natural disasters, averaging $19.2 billion in damage per event. (NOAA)
- The most expensive natural disaster in history was Hurricane Katrina, which cost more than $89 billion. (Newsweek)
- In 2021, home improvement site Angi found that emergency home repairs cost an average of $2,321 in 2021, an increase of 42% since 2020. (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% 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. If your home repairs aren’t completely covered by insurance, there are several ways, outlined below, you can get financing for disaster relief.
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.
- Homeowners insurance: 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 excess demand.
- 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.
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 $347 and $1,385|
|Wind damage||Heavy winds, cyclones, hurricanes||$10,674|
|Flooding and water damage||Heavy rains||Between $3.75 and $7 per square foot|
|Window damage||Heavy winds, wildfires, cyclones, hurricanes||$564 per window, on average|
|Sidewalk damage||Heavy winds, wildfires, cyclones, hurricanes||$5 to $11 per square foot|
|Roof damage||Heavy winds, winter storm, wildfires, cyclones, hurricanes||Around $1,000, on average|
|Frozen pipes||Winter storm||$200|
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 $200 to repair 200 square feet, while repairing the same square footage of brickwork could cost around $4,000, 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.