The financial fallout can last for years
“The impacts of these natural disasters are much broader than just that physical damage. It can disrupt virtually every aspect of someone’s financial life,” said Ali Harris-Saunders, with the non-profit Credit Counselling Society.
She divides the financial impacts into near- and long-term. Near-term includes the cost of accommodations, food, and other essentials during an evacuation, along with lost income and repairs to damaged property. Longer-term considerations could include reduced property values, higher insurance premiums, and the debt that often racks up once emergency funds are depleted.
“I find that for many households, the biggest challenge isn’t the actual disaster itself. It’s the financial strain that follows after it,” Harris-Saunders said.
Mortgage, phone, and utility providers can often offer temporary relief in cases of hardship. But that doesn’t happen automatically, so Harris-Saunders said evacuees should make contact with those providers as early as possible. They should also try and keep up with regular payments while those arrangements are being made, so as not to fall behind.
Rob de Pruis, with the Insurance Bureau of Canada, recently returned from Penticton, B.C., where insurance company representatives were on the ground answering evacuees’ questions after wildfires swept the region. “I was talking to a few residents … who literally left with only the clothes on their back, thinking they would go back the next morning,” de Pruis recounted. “Well, they were out for almost a week. They have no clothes.”
Know what your home insurance covers
Insurance policies generally cover living expenses for anyone under an evacuation order, including accommodations, food, and other essentials. De Pruis said insurance representatives were able to process electronic transfer payments on the spot for evacuees. Some insurers were proactively calling clients they knew lived in the region to let them know what to do.
“The moment that you’re evacuated, whether you have damage to your home or not, your insurance policy is triggered,” said de Pruis. Insurance is tapped first to cover immediate costs, while emergency supports offered by government are meant for “unmet needs” of the underinsured or uninsured, he added.
More challenges arise when authorities give the all-clear for homeowners to return to their properties and assess the damage.
It’s standard for home insurance policies to cover fire damage, but flood damage is trickier to navigate. Overland and sewer backup coverage can be purchased on top of a base policy, and the coverage amounts can vary based on various premium price-points. Aside from damage to the home itself, policies may cover food spoilage—a big issue when power has been out for days at a time. The spoilage may have been so bad that a fridge or freezer has to be replaced, another cost insurance might cover.
A home might still be standing, but in need of professional help before it can be inhabited, said Jim Mandeville, senior vice-president at restoration company First Onsite. “The first step is to do a really thorough survey of the house when you get back and that starts with the outside. Walk around and really look around, look up, look down, look at the roof … and see if anything looks different,” he said.
In the case of fires, newer builds are less likely to get soot inside because they’re sealed up more tightly. “If you’re walking around the house and you run your finger over something and you’re getting black on your finger, you’re going to want to get in touch with your insurance company and you’re probably going to want to look at having some professional cleaning done, which can range from very minor to very, very extensive.”
Don’t underestimate the cost of flood damage
Mandeville cautions against re-entering a flood-stricken property if there’s still standing water outside the home, and to instead reach out to your insurance company, which likely has preferred flood restoration contractors.
If there’s been water in a finished basement that’s ankle-deep or higher sitting for more than a few days, “you’re going to have a mould problem,” he added. “Costs will be tens of thousands of dollars, potentially many tens of thousands of dollars to get that remediated,” said Mandeville. “You’re probably also looking at potentially needing a new furnace and a new hot water heater, potentially electrical damage. It can be very, very expensive.” Mould remediation is not something to be done without professional expertise. Doing so incorrectly could threaten residents’ health.
The insurance coverage for flood damage often falls well short of what is needed to properly clean it up, Mandeville said. “That’s something that, next time your insurance comes up to renew, really should be a topic of conversation between you and your broker, especially if you live in an area that has had flooding before or may be prone to flooding.”
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