The Long-Term Financial Burden of Hurricane Recovery
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Here's your money briefing for Thursday, October 10th. I'm J.R. Whelan for The Wall Street Journal. Yesterday we discussed how some homeowners in the path of hurricanes are left with a sizable bill as insurance companies have tightened the terms of policies. That often compounds the financial pain as they clean up and rebuild.
A lot of people have to actually leave their job for some time, which can cause people to fall behind on expenses. And then obviously any damage to your belongings and your house can take a huge toll. And the research shows that debt climbs for a lot of survivors of disasters. Savings tends to go down and credit scores also can go down.
Wall Street Journal personal finance reporter Catherine Hamilton will join us after the break.
Listen at schwab.com slash washingtonwise.
For many homeowners, the financial hardship caused by a hurricane can extend for years after the storm has passed. Wall Street Journal personal finance reporter Katherine Hamilton joins me. Katherine, what are the latest estimates on the amount of property damage caused by Hurricane Helene?
Right now, Moody's Analytics is estimating that the costs could be as high as $34 billion, but that could change as things continue to progress.
How does the onset of powerful storms like Helene often disrupt people's finances?
They can devastate finances in a few different ways. And it's a really big shock to the system for a lot of folks. A lot of people have to actually leave their job for some time, which can cause people to fall behind on expenses. And then obviously any damage to your belongings and your house can take a huge toll. And the research shows that debt climbs for a lot of survivors of disasters. Savings tends to go down and credit scores also can go down.
What does the episode introduce about hurricane recovery costs and who is affected?
What do people often experience in terms of what their insurance covers and what it doesn't?
It really varies depending on the situation. I've heard from some people that if they have damage from both wind and flooding, for example, sometimes the flooding insurance will blame the wind and the wind insurance will blame the flooding. So that can limit how much coverage you get from those. But it's also a bigger issue for Helene specifically because a lot of the houses in Helene's path, We're not insured for flooding because it was more inland than a lot of people were expecting. And it's not a high flood risk area. So flood insurance isn't required in those areas.
You mentioned people going into debt a moment ago. How does that factor into the lingering effects on people's lives and their finances after a storm has passed?
It can have really long-term effects. One of the major effects is declining credit scores. So on average, credit scores fell about 46 points following disasters, one study found. And debt also actually compounds in many cases. So there was one study paper by the Urban Institute that showed that the amount of people with debt in collections in areas where there were disasters actually continued to increase four years after the disaster.
You and your colleague Veronica Dagger spoke to a man from Florida who dealt with Hurricane Ian two years ago. What was his experience?
So we spoke to somebody named Jason Johnson. He is from Fort Myers Beach, Florida. He experienced Ian two years ago and is also now experiencing flooding from Helene, which he and his wife had to take on about $70,000 of extra expenses from that flooding. But two years ago, his house also severely flooded.
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