In an election year full of talk about inflation, one category of spending is hitting Americans’ bank accounts harder than ever. That’s the cost of bad weather.
According to Bankrate’s 2024 Extreme Weather Survey, one in four (26%) U.S. homeowners say they are unprepared for the potential costs associated with extreme weather events in their area. I am. Midway through the 2024 Atlantic hurricane season, storms like Hurricane Beryl have already cost American homeowners and their insurance companies billions of dollars in losses.
If companies resort to price gouging in the face of storm-related shortages, the costs of severe weather could begin to be incurred even before the weather changes.
Will the price of weatherproof materials go up before a big storm?
As hurricanes and severe winter storms approach, concerns about rising prices arise. As Hurricane Helen approached the Atlantic coast last month, the attorneys general of North Carolina, South Carolina, and Virginia announced that their state price gouging laws had gone into effect. In Georgia, Governor Brian Kemp declared a state of emergency and warned residents against both price gouging and storm scams.
Price gouging laws exist in 37 states and impose penalties on companies that charge “exorbitant” or “exorbitant” prices for items needed in an emergency. In the case of a hurricane like Helen, price gouging could double the price of fuel for cars and home generators and triple the price of tarps, plywood, tie-downs and other weatherproofing essentials. There is.
The exact definition of price gouging varies by state, but typically a price increase of 10% or more moves into price gouging territory. Residents of states with price gouging laws are encouraged to contact their state attorney general to report problem businesses.
But economists and engineers suggest that price gouging before and after major weather events may not be the rampant problem that headlines and government press releases suggest.
The “myth” of demand surge and price hikes
Dr Debra Wilson from the University of Canterbury said hurricane price gouging was a “commonly held myth”. In fact, some scholars argue that disaster-related price gouging is a good thing. Ultimately, higher prices will discourage panic buying, prevent shortages, and even encourage out-of-state companies to concentrate their products in disaster-stricken areas.
Still, hurricanes and other major storms can cause increased costs. It’s just a slightly different situation. Anna H. Olsen and Keith A. Porter of the University of Colorado Boulder have conducted extensive research into the phenomenon of “demand surge,” or the increased cost of repairing or replacing damaged assets after a major disaster. I did it.
According to Olsen and Porter, repair costs can increase by more than 20% when a natural disaster occurs. But they point out that the trend is not primarily driven by price gouging by hardware stores or big box stores. Instead, Olsen and Porter analyzed repair costs in 52 cities along the Atlantic and Gulf coasts and found that labor costs, not materials prices, were the biggest driver of the surge in hurricane demand.
In other words, if your state has a price gouging law, it’s likely working pretty well (though you should report any suspected price gouging to the attorney general). But protection from high prices doesn’t guarantee that home improvement stores won’t run out of tarps. There’s also no guarantee that the contractor who helps you repair your home will also help repair all your other homes after the storm. . That’s why you should shop wisely – in front In the event of a disaster, this is a critical step in storm preparedness.
When to shop to avoid price gouging during natural disasters
The best time to purchase weather-resistant materials and other hurricane essentials is before the season begins. If you live in a hurricane-prone area, buy tarps, sandbags, We recommend stocking up on essentials such as tools.
The same is true if you live in an area that experiences other seasonal natural disasters, such as severe winter storms or wildfires. The earlier you shop before the season starts, the less you’ll have to worry about the price or availability of the items you need.
However, not all natural disasters come with advance warning. If you live in a hurricane-prone area, hurricane season has already begun. With that in mind, follow some basic rules of thumb. The sooner you shop, the more likely you are to be safe from price gouging.
Avoiding contractor fraud after a natural disaster
Price gouging is just one of the unfair business practices that consumers need to be aware of after major storms and other natural disasters. Contractor fraud, where a contractor asks for advance payment for work that is never completed or charges extra for unnecessary repairs, is another.
“Contractors are essential, especially when rebuilding and repairing homes and property after a disaster,” said Tasha Carter, an insurance consumer advocate with the Florida Department of Financial Services. “As with any industry, there are bad actors who seek to take advantage of consumers by causing harm or driving up costs. To avoid becoming a victim of fraud, consumers should ensure that contractors are licensed. We encourage you to check your insurance coverage, check what insurance you need, get multiple quotes, and review all documents thoroughly before signing.”
Does homeowners insurance pay for weatherproofing materials?
Home insurance is designed to cover the cost of repairing, replacing, or rebuilding your home and its contents if it is damaged, but it does not prepay for weatherizing or strengthening your home. . In other words, when purchasing weatherproofing supplies, you must purchase all materials at your own expense.
However, while your home insurance company won’t pay you the full price to insure your home is weatherized, you may be able to earn discounts or other incentives in exchange for installing certain upgrades. The FORTIFIED Construction and Reroofing Program, administered by the Business and Home Safety Insurance Institute (IBHS), maintains a list of home upgrade incentives available in certain states, including insurance discounts and tax credits. for example:
- Maryland insurance companies typically offer discounts to policyholders who install hurricane shutters, update exterior doors, and make certain roof upgrades that reduce losses from severe storms.
- Louisiana offers up to $5,000 in tax credits to homeowners who renovate their existing homes to meet state building codes.
- Rhode Island law provides homeowners with the option to complete certain mitigation upgrades in exchange for hurricane deductible exemptions.
Need to weatherize your home?
As climate disasters become increasingly common, it is important that all homeowners understand the climate risks to their property and take steps to protect against them. Doing so reduces the risk of damage to your home and may also reduce your home insurance costs.
Since 1980, every state in the United States has experienced at least a $1 billion disaster, and some states, such as Texas, Georgia, and Illinois, have experienced more than 100 disasters in the past 44 years. And insurance industry experts say extreme weather events are becoming more common and more damaging.
But according to Bankrate, only 9% of U.S. homeowners have invested in weatherization in the past five years, and 43% say they have done nothing in the past five years to protect against property damage from extreme weather. There is.
Weatherproofing requires an investment of time and money, but even small steps can improve your home’s ability to withstand natural disasters and protect your wallet from the effects of post-disaster price increases. Consider the following supplies and steps you can invest in to strengthen your property’s defenses before or during storm season.
| natural disaster type | ESSENTIALS TO BUY | How to prepare |
|---|---|---|
| hurricane/tropical cyclone | hurricane shutters or plywood tarp duct tape durable trash bags | Store or secure loose items in your yard, such as patio furniture or grills. Close all windows and doors, including the garage door Install hurricane shutters Clean gutters and downspouts |
| winter storm | Snow removal equipment such as shovels and snow blowers deicing products Fuel for private generators | Let all faucets drip to prevent pipes from freezing Set your thermostat to at least 55 degrees (F). Check that the generator is functioning properly |
| Earthquakes and landslides | furniture anchors cabinet latch durable trash bags | Secure items that may be damaged by shaking, such as televisions and ceiling fans. secure heavy furniture clear the way to at least two exits Latch cabinets and drawers to prevent spills |
| tornado | furniture anchors durable trash bags cabinet latch | Secure all loose items in your garden, such as patio furniture Close all windows and doors, including the garage door Set up a shelter on the bottom floor of your house |
| heat wave | Weatherstripping doors and windows window reflector curtains or shades air conditioner | seal doors and windows install air conditioner Cover your windows or use window reflectors |
| wildfire | fire extinguisher and hose air purifier metal wire mesh | clean the gutters Cover vents and decks with wire mesh Remove flammable materials within 5 feet of your home Remove bushes and fallen leaves from the garden |
Homeowner Responsibility: Prevent further damage
Home insurance policies include a section that details your “post-loss obligations,” or the steps you agree to take after your home is damaged, such as promptly reporting the damage to your insurance company. There may be.
One of the obligations of a policyholder after a loss is to prevent further damage to the property. For example, if a hurricane damages your roof and leaves a large hole, it is your duty to cover the hole with plastic sheeting or other material to prevent water from entering the attic and causing further damage. .
Fortunately, if you file a claim for the initial damage, insurance will usually cover the costs incurred to prevent additional damage. In the example above, this includes the cost of the plastic sheet.
When should I start preparing my home for natural disasters?
The best preparation for natural disasters begins long before the disaster occurs. Preventive maintenance is key, according to experts at the Insurance Institute for Business and Home Safety (IBHS).
“Preparing for severe weather is essential,” says IBHS research project scientist Jake Sober. “Understanding your risks and which elements of your property are vulnerable is the first step to preparing for the next natural disaster. Practicing preventive maintenance is key to keeping your property resilient. Gaining knowledge about how building materials like asphalt shingles and siding perform against weather conditions will help you make informed decisions to reduce risk to your home over time. ”
If you want to reduce risk in your home, here are some steps you can take:
- Understand the risk factors in your area. You may already be acutely aware of the natural disasters that threaten your area, but tools like ClimateCheck can help you assess which types of disasters you most need to protect your home from. Helpful.
- Perform annual preventive maintenance before the storm hits. Use the off-season (winter and spring for hurricanes and wildfires, summer and fall for winter storms) to inspect and maintain your home. IBHS has developed pre-disaster maintenance guides for hurricanes, wildfires, severe thunderstorms, and winter storms.
- Consider some major upgrades. In addition to seasonal maintenance like roof repairs and chimney sweeps, you can also invest in major upgrades like wind-resistant garage doors and reinforced roofs to increase your home’s defenses against the elements.
- Review your insurance contract annually. In addition to preventive home maintenance, take time to maintain your insurance by reviewing your insurance policy, taking an inventory of your home, and keeping your policy and agent contact information in an accessible location. . You can also use this opportunity to purchase cheaper home insurance.
