The True Cost of Losing Your Home in a Hurricane (After Insurance)

Storms like Hurricane Helene need only minutes to destroy people’s finances. Even those with good insurance and thousands of government subsidies need years to recover.

Jason Johnson, 49, watched from his neighbor’s third-floor window two years ago as 10-foot-high waters from the Gulf of Mexico poured into his Fort Myers Beach home. , Fla., during Hurricane Ian.

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His Jeep Grand Cherokee floated down the street—along with his refrigerator. His home, filled with 3 inches of mud and catfish, was unlivable. His two cars and boat could not be saved.

They had good insurance. Flood insurance paid $350,000. They received about $32,000 in car and boat insurance combined.

He and his wife, Michele Johnson, 55, knew it wasn’t enough.

He said: “Ian has been a huge financial burden that has set us back years.

When a hurricane or other natural disaster strikes, the costs are immediate. They also usually last a long time. There are hotel bills and lost days of work. Then there is money needed to cover construction and restoration.

Homeowners and self-employed people often postpone retirement and try to find more work. Many take out a lot of debt and fall behind on that debt. According to the Urban Institute, the percentage of people in the community who default on their mortgages increases in the years after a disaster and eventually doubles after a storm.

The Johnsons took $200,000 from their savings for home repairs after a hurricane two years ago.

They also paid off a $60,000 loan for a one-bedroom RV that they lived in for about two years during construction.

They were still paying for that storm damage when Helene delivered another gut punch in September. A flood could add another $70,000 to their tab. Their dream of debt-free retirement now seems impossible. Like the Caribbean vacation Michele is looking forward to taking.

“I am very tired of this,” he said.

Combined damages

The financial impact of hurricanes is hardest on those who were struggling to make ends meet before the storm. Bankruptcy and mortgage delinquencies remain high years later, according to a 2019 survey by the Urban Institute.

Urban Institute researcher Daniel Teles said: “It’s like someone hanging from the bottom of a ladder and they start to see their fingers slip. They’re trying to pay their mortgage, but they’re also paying their rent.

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Eight trees fell on Samantha Tarrant’s property in Texas during Hurricane Beryl in July. He estimates that they created a strong influence that left him $8,000 in debt.

The damage prevented him from accessing the Internet for a month, reducing the hours he could work at his remote job. A tree also fell on an uninsured shed where he was refurbishing old furniture as part of a side business he runs. All of this, along with the cost of removing the trees, prevented him from paying most of his bills.

“FEMA will come and provide assistance, but it’s not enough,” Tarrant said of the Federal Emergency Management Agency. “When you live paycheck to paycheck, there’s no way you can prepare for it all.”

Credit scores drop 46 basis points on average after a crisis, and many don’t bounce back much four years later, according to a 2017 paper by the Federal Reserve Bank of Kansas City.

People who live along the edges of the storm’s path often suffer financially, according to the Center. This happens because aid from FEMA and other aid groups is often larger for the areas most affected by the crisis in the first place.

Change of plans

Scott Townsley had planned to retire completely at the end of 2022. Hurricane Ian changed that.

The storm caused more than $300,000 in damage to his Sanibel Island, Fla., home. Insurance covered about half of the repair costs, although it took 12 months to claim most of the money. Townsley, a consultant, picked up a few more clients and continued to work to help cover costs.

Townsley considered himself lucky that some of his neighbors had not been reimbursed by insurers, he said.

However, the storm was not the only cost. After the hurricane, the insurance premium on his 3,000 square foot home increased by nearly $20,000.

Townsley and his wife, Carol, decided it was time to move. They sold their Sanibel home earlier this year for $1.7 million, about $300,000 less than what they would have sold for before the storm, he said.

He said: “It’s just money, and a wasted year. But we’re the lucky ones. We get that.”

The rising risk and cost of being hit by another storm is causing many people to consider evacuation.

“We live in paradise 95% of the time, but the other 5% can be a nightmare,” said Becky Monroe.

She and her husband used about $200,000 of their retirement savings to repair their Sanibel Island home after Hurricane Ian.

“We are fortunate that we had enough money during our vacation to cover the cost of the hurricane at least once, but if it happened again we would have to seriously consider staying in Sanibel,” he said.

Email Veronica Dagher at Veronica.Dagher@wsj.com and Katherine Hamilton at katherine.hamilton@wsj.com

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