Surviving the Financial Storm After a Hurricane
By Kristi Waterworth
By the time this blog publishes, Hurricane Florence will have already come and gone, but for the people who were in her wake, the real struggle has only just begun. Even a Category 1 hurricane can make a huge mess, dump buckets and buckets of water on soil that’s already saturated (a huge problem for a building's foundation) and destroy the morale of an entire state.
Admittedly, I have never had to face a hurricane straight on. I’m from the land of tornadoes and ice storms: the Missouri Ozarks. We see our fair share of unholy weather, though. In 2003, for example, I learned from the news that a recently closed new construction home had been completely demolished in a series of deadly tornadoes that popped up all at once that spring weekend. My client, thankfully, was out of town for work when the storm hit.
But it’s not really the tornado or the ice storm that’s the worst of it, and I suspect that holds for hurricanes, too. It’s the after days. It’s figuring out how to move forward when your life is flipped completely upside down. Having been witness to extremely destructive tornadoes has given me plenty of experience in those after days. After the storm. After the clean-up.
And, eventually, after the reconstruction.
As of the writing of this column, Florence is making landfall near Wrightsville Beach, North Carolina. The news reports are already showing some of the destruction that the storm is causing in the area, and things are looking grim for those who live in and around the areas in the hurricane’s path. Some people have to stay in the danger zone because of their jobs, others have no options or places to go. Whatever the reason, it’s heartbreaking to watch these storms tear lives apart.
Step One: Take Stock of the Damage
When the rain stops and the winds finally die down, you’re going to have to move forward, one step at a time. I know it’s hard, maybe the hardest thing you’ll ever do, but you can. You can survive the after days.
The first thing you have to do is take stock of the damage to your home, your car and your personal belongings. Grab your phone and take pictures of all the damage. Catalog all the replaceable items that have been damaged. Have a cry over family heirlooms and other priceless items the storm took from you forever. Don’t clean up, no matter how much you may want to. The insurance adjuster will be by and they need to see everything -- treat your home like a crime scene as much as possible.
Step Two: Summon the Adjuster
The last thing you probably want to do right now is deal with bureaucrats, but it’s an absolute necessity at this point. You can’t start to recover without the help of your insurance company. Call your local agent or the national number for your homeowner’s insurance, auto policy and any other insurance that may be involved (flood insurance, for example, if you’re carrying it). Tell your insurance representative that you need to file a claim and have an adjuster sent out as soon as possible. In a disaster area, it can take time for adjusters to make their way through the long lists of people that need to see them, even with the extra help that companies tend to bring in for emergencies like yours.
When the adjuster does come out, point out all the damage. Show them the photos you took on day one. Ask a lot of questions about what is and is not covered and exactly where you can find that in your policy (and have those papers handy, provided they survived the storm).
Some pieces I read to prep for this column paint insurance adjusters as the enemy, but that’s not really the case. They are definitely looking to give you the smallest reasonable payout possible, but they’re not trying to stick it to you, you can negotiate with them. When they make an offer to you for your payment, don’t accept right away. Instead, tell them you’ll be in touch in the next few days.
Take that time to go through the list of things they said would be covered and try to figure out what it would cost to replace those things with like items. For example, if you entire living room was destroyed and it contained a couch and a 65 inch smart tv and some bric-a-brac, look for a similar couch from a few retailers, write down the prices from each retailer and do the same for the television.
It is a bit of work, there’s no doubt about it. But you’re talking about a check that could be five or six figures, this is no time to slack off. You’ll need to go through the same process for your home, but with the help of an experienced contractor that works in the appropriate area. Your HVAC guy may tell you it’ll take $5k to get the furnace back online, your general contractor might want $40k to essentially rebuild the outside of your house, replacing broken windows as they go.
This is your homework. Do it all now and the rest is a breeze. Oh, and don’t forget, your insurance policy should also cover the contents of your refrigerator and freezer -- those little stockpiles can add up.
Step Three: Present Your Findings and Negotiate
When you come back asking for 20 percent more than your insurance adjuster had offered, you have to be able to support your request. That’s why all that legwork in Step Two matters. Fax over all the papers you’ve collected as part of your counter-offer.
“No, $100k isn’t enough. My contractor alone needs $90k to get my house back into livable condition.” It’s as simple as that. They won’t give a penny you can’t prove, though. And don’t even think about screaming, threatening, throwing a fit or anything like that. Don’t lose your cool. This is a negotiation, it’s not a toddler tantrum. Play it like a pro. If you can’t trust yourself to do so, call your Realtor and ask them for help.
Step Four: Getting Life Back to Normal
At some point, you and your adjuster found common ground and you received a payout. You’ll probably get more than one check, depending on how many policies are involved and whether or not you’re carrying a mortgage. Your home repairs should come as a check made out to both you and the bank that holds the note, or that money will be placed in escrow to be used as your home is being fixed.
You’ll get another check for your personal belongings. In theory, this will take care of all you’ve lost, but you know how it goes. Sometimes there’s not enough money in the world to fix that sort of thing. It will get you a new television and a couch, so there’s that to look forward to.
Eventually, life is going to get back to normal. Your home will be better than it was when the storm hit since those repairs will have to comply with the current building code, not the one from 10 or 20 or 50 years ago when it was built. You may even have enough left over to add some green features to help reduce your utility costs or put in that hot tub you always wanted.
Step Five: Do You Stay or Do You Go Now?
This is the hardest part. When you’ve been struck by a force of nature and lost all of your ability to control the outcome, it can seriously impact your emotional state. Soldiers aren’t the only people who get post traumatic stress disorder, anyone who has felt that their well-being was being threatened and they had no way to change that can have that switch activated.
Severe weather is definitely a cause of PTSD.
If you suddenly find yourself having trouble breathing every time the sky darkens or when reading about other natural disasters on their way to other areas, you may also be feeling completely unsafe in your current location. Even though your newly rebuilt home is safe and sound, your urge to get away from it all could be really strong.
You have a decision to make. Do you stay or do you go? Staying means you have to face your demons, at least enough to learn how to corral them. Going means risking your now-reflexive fear flaring up when you least expect it, but at least you’ll get a do-over. It’s a hard call, but one that people often confront in your situation.
My Closing Thoughts
Living through a natural disaster, especially as a homeowner, can be painful, complicated and messy. It takes the time it takes to get all the pieces of the puzzle collected up, all the while people expect you to go to work and school like nothing happened. But we both know something did happen -- something pretty big, in fact.
Whether you ultimately stay in the community or you leave for safer ground, it’s important to remember to take it all one step at a time. If you rush, you may not get the insurance settlement you need or, if you do choose to sell, you could be leaving a lot of money on the table that you could be using in your new life.
For those of you who have lived through these things in the past, my heart goes out to you. For those of you in the path of the latest killer storm or who are perched upon the most recent earthquake epicenter, I wish you nothing but the best.
I hope you know that you can always come to us at Home.Loans with any real estate or mortgage-related questions you might have. We’ll do our best to help you get going in the right direction.