4 Important Steps to Take if Your Home Was Damaged in Hurricane Florence

Follow these steps to avoid price gouging from home contractors.
Homes on a flooded street

Hurricane Florence has been downgraded to a post-tropical cyclone as of Tuesday, but that’s little comfort to the roughly 4.56 million homeowners who live in the Carolinas. As residents of the region slowly start the difficult process of assessing the damage to their properties, more than 500 residents of North Carolina have already reported price gouging complaints to the state's attorney general's office, according to CNN.

While both North and South Carolina have laws prohibiting price gouging during states of emergency, that hasn’t stopped some business owners from hiking the prices of staples, such as gasoline and water, which so far have made up the bulk of consumer complaints. But as the storm settles and coastal residents return to assess the post-Florence damage on their property, they may encounter another kind of price gouging—by home contractors.

Protect Yourself from Home Contractor Price Gouging

Damage done by hurricanes is incredibly costly, and it can take months or even years to fully understand the financial impact of such a storm. But early estimates by Moody's Analytics puts the cost of property damage caused by Hurricane Florence between $17 and $22 billion, with the potential for costs to rise higher if the current flooding persists. If this forecast holds true, it could rank Florence among the top 10 costliest hurricanes in the U.S. since 1900.

Costliest hurricanes since 1900

RankNameRegions affectedYearCategoryDamage (U.S.)
1KatrinaSE FL, LA, MS20053$125 billion
1HarveyTX, LA20174$125 billion
3MariaPR, USVI20174$90 billion
4SandyMid-Atlantic & NE US20121$65 billion
5IrmaFL20174$50 billion
6IkeTX, LA20082$30 billion
7AndrewSE FL, LA19925$27 billion
8IvanAL, NW FL20043$20.5 billion
9WilmaS FL20053$19 billion
10RitaSW LA, N TX20053$18.5 billion
Source: National Oceanic and Atmospheric Administration

Demand for contractors will be high in coastal communities during the next few months, which may put home owners at a disadvantage. If you return to your home after Hurricane Florence and find significant damage to your house, follow these steps.

1. Photograph the hurricane damage

After you've determined that your home is safe to enter, document any and all damage as soon as you find it. This should be done before removing any water from your home or cleaning up any debris created by the storm.

By photographing the damage to your home, you'll have proof of the extent of the damage, in case a contractor tries to exaggerate the damage and overcharge you, or if your insurer disputes your claim.

2. Initiate your insurance claim sooner rather than later

Once you've documented all the damage you can find, it's time to initiate your claim. Getting this process started as early as possible is crucial. Tens of thousands of properties were damaged by Hurricane Florence, and your insurer will quickly become inundated in claims. Send your agent the photographs you've taken, explain the damage and ask how you're insured.

It's important to note that wind damage to your home may be covered by your windstorm or homeowners insurance policy, while water damage caused by regional flooding would fall under your flood insurance policy.

These policies may or may not have been sold to you by the same insurance company, but in either case, you'll need to file separate claims for each type of damage. Your insurance agent will walk you through this process. Likewise, any damage to your car would fall under your comprehensive auto insurance policy, if you have one.

Under normal scenarios, your insurer would promptly send an insurance adjuster to assess the total cost of the damage. But in cases of regional disasters, they might not have the bandwidth to personally evaluate your claim right away. Instead, they may use public reports or even drones to assess the general flooding in your neighborhood. In other cases, they may send you a portion of your payout in advance checks, so you can get started on hiring a contractor. In other situations, you'll just have to wait. This is why initiating your claim as early as possible is important.

You may also ask your insurer if you can hire a public adjuster to evaluate your claim, but public adjusters will also be in high demand.

Regardless of whether an adjuster visits your home, you need to ask your contractor how much the damage should cost to repair, and ask your insurance agent how much the company is willing to pay. If there's a large disparity between these amounts, it could be due to escalated prices, or it could be due to the coverage limits listed in your insurance policy.

There are three limits your property may be insured against: the actual cash value, the replacement cost value or the guaranteed replacement cost.

Coverage LimitDefinition
Actual Cash Value (ACV)The ACV is the market value of your house, minus the depreciation that has taken place since you bought it. For example, if you file a claim to repair a 15-year-old roof, your insurer wouldn't reimburse you for the cost of a replacement roof. Instead, they would take the original price of the roof, reduce that value by an amount in line with 15 years of depreciation, then pay you the difference. Because of this, the ACV likely won't cover the entire cost to rebuild your home with new materials at today's prices.
Replacement Cost Value (RCV)The RCV is the amount it would cost to repair your property at the current prices for labor and materials. As long as your claim falls within your policy's maximum limits, you would only have to pay your policy's deductible. But if your claim exceeds your policy's limits, you'll have to pay the difference.
Guaranteed Replacement Cost (GRC) / Extended Replacement Cost (ERC)If you have GRC coverage, your insurance company will pay a certain percentage beyond your policy's limits to rebuild your home. This may be necessary if a regional disaster, such as Hurricane Florence, temporarily raises the cost of labor and materials.

If you have ACV coverage, make sure you understand how much of the cost you'll be responsible for before approving any repairs to your home. In any case, you're responsible for paying the deductible listed on your policy's declaration page. This amount is typically between $500 and $2,000.

If your home will be uninhabitable until the repairs are finished, you should also ask your insurance agent how much additional living expenses (ALE) coverage you have. This coverage will pay for reasonable expenses, such as hotel fees and the cost of meals, while you're out of home.

3. Ask your insurance agent for contractor referrals

In some cases, insurance companies will refer you to a list of contractors. If they do, this should help you weed out untrustworthy professionals. Once you've received their recommendation, you need to do two things.

First, research the contractors they recommend to see if other homeowners approve of their work. It's in the insurance company's best interest to make sure adequate repairs are done to your home, but if you're not comfortable with any of the contractors they recommend, you can choose your own.

Second, if you select a contractor your insurance agent recommends, ask if the insurer will guarantee the contractor's work. Getting this guarantee in writing means that your insurer will cover any subsequent work without requiring you to pay a second deductible, should the contractor's initial repairs turn out to be insufficient.

Sometimes contractors will ask you to sign an "assignment of benefits" or "direction to pay" form that allows them to work directly with your insurance company. This agreement may be more convenient for you, but you need to carefully examine all documents and speak with your insurance agent before signing. Giving your contractor permission to receive payment directly from your insurer simplifies the claims process for you, but you don't want to give the contractor ownership over the entire claim. If you do, you won't be able to weigh in on what repair decisions are being made or the final amount of the claim.

If your insurance company doesn't refer contractors in your area, you'll need to do the leg work of finding a contractor yourself. Check Houzz.com or HomeAdvisor.com to find well-rated professionals and reach out to them for a quote. You should obtain a quote from at least three contractors to determine that you're receiving a fair price for the repairs.

4. Hire the contractor as early as possible

You don't want to rush this process, but the waiting list for good contractors is only likely to grow in the weeks following a disaster. If you've initiated your insurance claim and found a reliable contractor, approve of their quote and schedule a time for them to come as soon as you can. Doing so will put you and your family back in your home and daily routine more quickly.

What to do if you can't find a fair price

If contractor prices seem unreasonably high, and if you can’t find any professionals in your region who are willing to do the repairs for an amount similar to your insurance company's estimate, take the contractors' quotes back to your insurer and try to negotiate a higher estimate.

If they won't yield and if you can't afford to pay the difference, you have three options—Apply for a disaster loan, do the repairs yourself or temporarily live with the damage.

The Small Business Administration (SBA) is in charge of distributing disaster loans to families after natural disasters. Despite the name, you do not need to own a small business in order to qualify for a loan. Primary residences (but not vacation homes) are also eligible for a loan. You can apply online or by mail for a disaster loan, then follow the administration's directions to complete your application.

You may also apply directly to the Federal Emergency Management Agency (FEMA) for disaster relief, but the agency has been underfunded and overburdened after massive losses from hurricanes in 2017, so FEMA might not be able to bail you out.

If you're experienced with DIY home repairs, you may choose to use your insurance payout to pay for materials and do the labor yourself. Before doing so, make sure you fully understand what repairs are necessary and how to do them, because your insurance company won't accept a second claim if your own repairs are insufficient. You’re also responsible for obtaining all of the permits required by your municipality to carry out renovations.

If you're not comfortable doing the repairs yourself, but you think you can temporarily live with the damage, ask your insurer what minimum work needs to be done to make your home safe and to prevent them from making any claims of negligence against you in the future.

Once that minimum work is done, ask your insurer if you can wait for the market to cool before pursuing further claims. It may mean you'll have to live with some cosmetic damage to your home temporarily, but it could save you money in the long run.

Daniel Caughill

Daniel is a former Staff Writer at ValuePenguin, covering insurance, retirement and other personal finance topics. He previously wrote about compliance and best practices for K-12 school districts at Frontline Education.

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