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YOUR MONEY-Renovating after a natural disaster? Planning is key

Beth Pinsker

NEW YORK, June 5 (Reuters) - For the Parkers of Houston, Texas, there will be no summer vacation this year because they are still paying off the dent in their finances left by 2017's Hurricane Harvey.

The couple joins a growing list of people forced to renovate or completely rebuild their homes after a natural disaster, as severe weather events wreak damage throughout the country and spending in their wake drags out over multiple years.

Fixing up homes after a natural disaster barely used to register in home renovation data. A new survey https://www.houzz.com/magazine/2019-us-houzz-and-home-study-renovation-trends-st s e t i v w - v s 7/8121921536 released June 5 by the home site Houzz.com shows that 6% of home renovators in 2018 were addressing damage from a natural disaster, which jumps to 12% for such renovations over the past five years.

Regionally, those numbers are continuing to climb, said Nino Sitchinava, Houzz principal economist, particularly for California, Texas and Florida.

The Joint Center for Housing Studies of Harvard University has also been looking into the impact of natural disasters on the home renovation market https://www.jchs.harvard.edu/sites/default/files/HarvardtJCHStImprovingtAmericas t H o u s i n g t 2 0 1 9 . p d f .

"We've been studying home improvement for 25 years and losses from national disasters haven't been on the radar. Suddenly, we're seeing this pop up as a significant share," said Kermit Baker, director of the remodeling future program at the Harvard center.

In 2016-2017, the most recent year reported by the center, spending on disasters repairs exceeded $27 billion in the United States, against $14 billion in 1996-1997.

Preparing for a disaster is drastically different than paying for a planned kitchen makeover.

"You have to prepare, prepare, prepare. Whatever that means, to you - do it," warned William Begal, an independent consultant based in the Washington, D.C. area who ran a renovation company for 18 years.

PAYING THE PRICE

The Parkers now know all of this first hand. When their house in the Linkwood neighborhood flooded, there were some things they needed to do right away, yet they are still spending two years later.

The presence of water means you have to move fast. They had to rip out carpet and drywall themselves, and then hire a crew out-of-pocket before any insurance adjustor came around.

They also could not live in their house while it was being fixed, so they forked out $3,000 a month for a rental.

Once the insurance kicked in, they received a small sum from an escrow account a few weeks after the flood, and then had to wait for the project to be 50% complete before they got more. They did not get the final payment until the project was done.

"It was key we had stashed away an emergency fund so we were not spiraling downward," said Angie Parker, 38, who is a personal fitness trainer in the Houston area.

Parker said she spent many hours on the phone with the insurance company, crying sometimes, being aggressive when she had to be.

Luckily, the family had flood insurance, which was a requirement for their mortgage in a flood-prone neighborhood.

Most people, however, do not have flood insurance, and this further delays rebuilding efforts.

Yet, there were still issues. An inadvertently checked box on a form meant the contents of their house were not covered. So they were out more than $100,000 for furniture, clothing and housewares, and lost all their appeals to have those covered.

Jerry Linebaugh, an investment advisor representative who owns JLine Financial near Baton Rouge, Louisiana, had a similar experience when his office flooded after a rain event in 2018 that was not even a named storm - just heavy rain over three days.

"You have to have a cash reserve, you have to have your insurance in line, you have to do disaster drills," said Linebaugh, who had planned for the worst ever since Hurricane Katrina hit nearby.

Linebaugh had a system set up to transfer his office lines to cell phones and keep his operations going from hotel rooms and his employees' homes.

He had six months of operating expenses to float his business. And he needed all it, because he did not have flood insurance.

It was four months before Linebaugh won an appeal with his business insurance policy to cover losses based on an inland marine clause, which worked for him because the damage started with water coming in through a bathroom drain.

"Probably thousands of people didn't get that claim check because they didn't know about that," said Linebaugh. (Editing by Lauren Young and Bernadette Baum)