Options Are Few For Storm-Ravaged Homes With Insufficient Insurance

With the Atlantic hurricane season underway, homeowners should be aware that inadequate insurance coverage can make recovering from a bad situation even worse.

Whether damage from a storm comes from wind or water, homeowners whose coverage is insufficient have discovered the hard way that it makes recovery difficult and that their options for help are limited.

“Some people believe they don’t need [coverage], and then they experience an event and realize they can’t afford the cost of repairs or rebuilding,” said Brock Long, former administrator of the Federal Emergency Management Agency and now executive chairman at Hagerty Consulting, an emergency management consulting firm based in Evanston, Illinois.

As temperatures rise and more moisture is held in the air, massive storms — some of which stall and dump torrential rainfall — have become more frequent in recent years. This has caused flooding in places that previously were unaccustomed to it.

While most homeowners carry standard homeowners insurance, those policies typically have a hurricane deductible, and don’t cover damage from flooding — which often causes the most damage.

Separate flood insurance is available through the National Flood Insurance Program or a private carrier. Yet unless you’re in a special designated flood zone, your lender likely doesn’t require it.

When a homeowner faces storm-related damage — regardless of the weather event — that is uncovered, there might be government programs that can provide financial assistance: FEMA grants and Small Business Administration loans. However, that help is not guaranteed, and it likely wouldn’t get you quickly back on your feet.

For instance, after 2017′s Hurricane Harvey, which dumped as much as 60 inches of rain in some spots in Texas, the average FEMA grant for individuals was $7,000, while the average claim through the National Flood Insurance Program was more than $100,000.

“FEMA can kickstart recovery, but it wasn’t designed to make you whole,” Long said.

And, FEMA only gets involved when the weather event is declared a disaster area by the president.

SBA loans also are only available in those situations. You can apply for up to $200,000 toward the cost of repairing or replacing your primary residence — vacation homes generally don’t count.