As a homeowner in North Carolina, financial preparedness is essential, especially when living in a region vulnerable to hurricanes. In the wake of devastating storms like Hurricane Helene, being proactive with your finances is just as important as securing your home physically. With more than 1 in 4 U.S. homeowners feeling unprepared for the financial impact of extreme weather, it’s vital to assess how well-protected you are against such emergencies.
According to Bankrate.com, 2023 saw 28 weather disasters in the U.S., each exceeding $1 billion in damages. Closer to home, North Carolina and neighboring states are still recovering from the havoc of Hurricane Helene. Few of those impacted were properly insured against this type of tragic event. According to the Washington Post, “the Individual Assistance Program, run by FEMA, can help provide urgent resources but is capped at around $42,500 for housing and $42,500 for other costs. Most recipients get far less.” As our state rebuilds, the question remains: how can you ensure you’re financially equipped when disaster strikes?
In this article, we’ll cover homeowners’ insurance, flood insurance, issues that arise from sewage after big storms, and mortgage refinancing for emergency preparedness. By understanding these issues and concepts, you can protect your investment and avoid being caught off guard in the face of future storms.
Homeowners Insurance Explained: What You Need to Know
Homeowners insurance is your first line of defense when disaster strikes, but not all insurance policies are created equal. In inland counties affected by Hurricane Helene, only 0.8% of homes had flood insurance, compared to 21% in coastal areas. This gap leaves many homeowners financially vulnerable to water-related damage, which is often excluded from standard homeowners’ insurance policies.
As insurance agent Melissa Pyatak points out, understanding the differences between coverage types is critical: "Hurricane and wind coverage can be hard to distinguish on a regular homeowners insurance policy, as these are often subject to different deductibles. Many policies also exclude coverage for flooding and mudslides, two common consequences of hurricanes."
She advises North Carolina homeowners to review their policies annually, especially those in areas like Wake Forest, Raleigh, and Durham. "Spend time with a local agent who can explain your deductibles, policy exclusions, and options for additional coverage. It’s also important to remember that most insurance companies impose a moratorium—preventing changes to your policy—once a storm is approaching, so review your coverage before hurricane season."
For those living in townhomes or condos, Melissa suggests getting a copy of the association by-laws and ensuring you have a proper HO6 policy, which covers interior components of your unit. Importantly, she stresses the need to consider flood insurance separately from homeowners’ insurance, as natural flooding is excluded from most standard policies. This type of coverage is available through the National Flood Insurance Program (NFIP) or private insurers, and it can protect both the building and personal property in the event of a flood.
Another critical point is the risk of sewer backups, which are often excluded from standard homeowners’ insurance. After heavy storms, the influx of rainwater can overwhelm municipal sewer systems, leading to contamination. According to T-Square Engineering, after Hurricane Florence, “Camp Lejeune in North Carolina had an estimated 84,000 gallons of sewage running throughout the area.” The Florida Department of Health issued a statement on this topic: “If a sewage backup has occurred in your home, stay out of affected areas and keep children away. If your entire home has been saturated, abandon the home until all affected areas, including but not limited to carpets, rugs, sheetrock, drywall, and baseboards, have been thoroughly cleaned and disinfected.” There are policies to cover this type of damage as well.
Refinancing Your Mortgage for Better Liquidity in an Emergency
Beyond insurance, mortgage refinancing can be an essential tool for homeowners preparing for emergencies like hurricanes. Most people realize that refinancing your mortgage can lower your monthly payments, but it can also provide a cash-out option, giving you liquid money that can be used for emergency repairs, temporary housing, or other storm-related expenses in an emergency.
Hurricanes often cause damage that insurance may not fully cover, or there may be significant delays before your claim is processed. A cash-out refinance allows you to access the equity in your home, providing immediate funds for repairs or temporary accommodations.
Additionally, refinancing can offer the benefit of switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, ensuring that your payments remain stable. It can also reduce that monthly payment by lowering your interest rate, as mentioned above. Lowering your monthly mortgage payments and having a solid budget through refinancing can free up money that can be used to purchase the necessary insurance policies each year.
The Bottom Line
Financial preparedness is key to protecting your home and your peace of mind. By ensuring that you have the right insurance policies, reviewing your coverage regularly, and considering mortgage refinancing as a tool for financial flexibility, you can protect your home and your family from the unexpected challenges hurricanes bring. Whether you're looking at homes for sale in Raleigh or already own property in Durham or Wake Forest, take the steps today to safeguard your investment and ensure you're ready for whatever nature throws your way.
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