Overcoming Hurricane Damage and Avoiding Contractor Fraud

Hurricane Harvey, which made landfall in Houston on August 25, will be the most expensive storm to hit the U.S. Texas will need up to $180 billion in aid. More than 40,000 homes were destroyed and about 1 million cars wrecked. Much more were left with greatly damaged homes in need of repair.


Hurricane Irma, which struck several Caribbean islands before hitting Florida, has had a similar toll. More than 60% of homes in Florida have no power. 90% of homes in the Florida Keys have been damaged. Irma may top Harvey in its cost to rebuild.

As millions in the South struggle to recover, there is one sector set to benefit. Home improvement shares have climbed over the last two weeks, even as rain continues to fall. Shares of Lumber Liquidators, Lowe’s, Home Depot, and generator manufacturer Generac climbed up to 4% as demand increases.

Homeowners in Texas, Florida, Georgia, and South Carolina are returning to damaged homes. The need to rebuild has increased demand for home improvement materials and generators. Big-box stores have become vital to recovery efforts after major storms.

Here’s how Home Depot and Lowe’s are responding to the devastation and tips for making an insurance claim.

Planning Begins Before the Storm

Lowe’s and Home Depot did not wait for the storms to make landfall to begin preparation for the demand. Earlier in the year, Home Depot preloaded trucks. Four major distribution centers were stocked in hurricane prone areas. The retailer focused on plywood, generators, and cleaning products to restock local stores. Once a hurricane alert comes from a vendor, the trucks move out.

Peter Capel, Home Depot vice president of field merchandising, pushed for police escorts of supply trucks through barricades.

Over the course of 3 days in Texas, Home Depot set up a hurricane command center in Atlanta. Managers were told to freeze prices and move in need products like generators and chainsaws to the front. Nearly 700 trucks of supplies were sent to Texas stores by August 31.

Even as streets flooded and stores were told to shut down, trucks kept rolling out of the warehouse with recovery products. Home Depot directed supplies to Baytown, about 30 miles from downtown Houston.

Hundreds of employees were also drafted from teams to track the storm and help products get delivered. Workers from as far away as Austin and Waco were brought in to stock stores in coastal areas.

Home Depot is the clear leader in hurricane response. While Home Depot spent $50 billion to respond to Hurricanes Katrina and Rita, this expense brought in 10-15x more sales.

As soon as it was safe, Home Depot stores began reopening to sell the built up stock.

Home Depot’s plan was created after years of hurricane seasons. This plan reduces supply disruptions and ensures it can deliver products to storm affected areas. Of course, it also helps the retailer take advantage of the surging demand.

Price Freeze Policies Prevent Price Gouging

Several airlines and stores have been criticized for price gouging in Florida and Texas. Home Depot and Lowe’s do not raise prices during natural disasters. Both use price freeze policies.

Storms often increase profits for big-box stores. Boosted profits can last for a year or longer in hard hit areas. After Hurricane Sandy hit New Jersey in 2012, Home Depot reported a $242 million boost in 4th quarter profits.

Most Common Home Repairs After a Flood

With most hurricanes, most home damage is the result of wind and heavy rain, not flood waters. This is good news if you have homeowners insurance. The most common form of damage is to the roof. Hurricane force winds can cause major damage to any type of roof, especially shingles and tile. The older your roof, the more likely it is to fail in a storm. Florida law requires that the entire roof be replaced if 25% or more is damaged. This means your insurance company will pay for replacement if one-quarter or more is damaged by wind and rain.

Damage to gutters, windows, and siding is also common. Sometimes windows and siding must be replaced to prevent water from getting inside. Foundation repairs are also common after a hurricane. This is more likely if your home or property gets flooded because the water has nowhere to go. Your flooring and drywall may need to be replaced as well.

When your home suffers structural damage, expect it to be expensive. Make sure the work is done properly and to code.

You may find it cost effective to add other projects while repairing hurricane damage. Just remember insurance only covers repairs from hurricane damage. Any projects you add will be out of pocket.

Flood Insurance and Hurricane Damage

Homeowner’s insurance usually does not cover damage from flooding. Homeowners in Texas and Florida are learning this the hard way. In Houston, just 1 in 5 homes has flood insurance. This may force families to abandon their homes or take on huge debts. While disaster aid will be available, the amount you can receive is capped. Aid is also based on income.

The only way to protect yourself against flooding is a flood insurance policy. Most are sold through the National Flood Insurance Program. This program covers up to $100,000 for home contents and $250,000 for structural damage. As many as 100,000 claims from Hurricane Harvey alone have flooded the system already.

It’s important to have flood insurance coverage in high-risk areas, but the claims process is still complex. After Hurricane Sandy, many homeowners were shortchanged after inspections. Hurricane victims can expect a long process before getting relief. Sometimes flood damage claims can take years to pay out.

Hurricane Deductibles May Be a Problem

A little-known provision in many homeowners policies allows insurers to charge “hurricane deductibles.” These policies mean homeowners may face a higher cost if a natural disaster strikes. These sums are not a flat cost but a percentage of the repairs. Your policy may require that you pay anywhere from 1% to 10% of the claim amount. If a $200,000 home is destroyed, this means the homeowner must pay $2,000 to $20,000 before insurance kicks in.

Most policies in Texas and Florida have a 1-2% out of pocket cost in a hurricane. The average homeowner will need to pay $5,000 out of pocket for coverage.

Tips for Making a Hurricane Damage Claim

It’s estimated that insured losses from the hurricanes will reach up to $50 billion. If you have been affected by the hurricane, it’s important to follow the right process to speed your claim.

The first step is contacting your insurance companies. An insurance adjuster may not be able to get to the house right away for an inspection. There must be safe access to the home before an inspector can check the damage. Still, you should let your insurers know your home and vehicle have been damaged and how to reach you.

Insurance companies also handle claims on a first-come, first-serve basis. Expect to call several times before you get through to someone to file your claim.

Even if you do not have flood insurance, you should still call your home insurer. Homeowners insurance excludes flood damage, but it usually covers wind and water damage. Do not assume you do not have coverage.

Make sure you keep excellent records. Make a note of every contact with your insurance company, including who you spoke with, the date, and what was said. This can help you later if you have problems with your claim.

Take pictures of all damage and make an inventory of your belongings. This can speed the claims process and prove damages if you begin repairs before the claim is approved. You can reduce the risk of more damage by making temporary repairs. Cover a damaged roof with a tarp and board up damaged windows. All standing water and wet belongings should be removed quickly to prevent mold. You can use a dehumidifier to get air moving and dry out the home.

Your policy may have coverage for additional living expenses. This can give you money for immediate expenses like food, shelter, and emergency repairs to the house. Keep receipts for any expenses for immediate repairs, evacuation, hotels, and meals.

You may also qualify for disaster aid from FEMA if you do not have insurance. FEMA offers money for emergency repairs to your home not covered by insurance. This aid covers major repairs needed to make your home sanitary and safe. It will not return your home to its pre-damaged condition.

Contractor Fraud After a Storm

Be wary of anyone who shows up at your house offering a great deal on repairs. Contractor scams often follow serious storms. These storm chasers canvas areas and promise fast work for cash upfront. These contractors may run off without completing any work at all. Others may use poor quality materials or do work that is not to code.

Always hire a licensed and skilled local contractor to repair your home. If the contractor cannot show a license, do not hire them. You should also check that they have insurance. Ask for references to show they have experience performing the type of work you need. Get at least 3 estimates to make sure you are getting an accurate and fair price.

To avoid getting scammed, use a contract. Make sure everything is in writing, including the cost of the work, guarantees, and the timeline. When you sign the contract, there should be no blank spaces. Never work with a contractor that requires an upfront deposit.