The Hidden Costs of Natural Disasters: Are You Financially Prepared?

Natural disasters are becoming increasingly part of daily headlines worldwide, and this is for a number of ever-evolving reasons. Climate change, extreme weather conditions, urbanisation and environmental degradation to name a few... From raging wildfire to hurricanes, devastating floods to tsunamis, the frequency and severity of these natural disasters are no longer just isolated, nor unpredictable occurrences.

Closer to home in the UK, the aftermath of these extreme natural events and changing weather patterns has left homeowners, landlords and commercial business owners with a huge financial strain and burden. Many do believe that they are fully covered in their insurance policies, yet in reality, what’s covered and the lack thereafter is something to be aware of. With this in mind, there are often gaps in policies leaving unwanted hidden costs for policyholders to grapple with which can create unnecessary worry, stress and uncertainty about what lies ahead.

Natural disasters such as floods, earthquakes, storms and wildfires are becoming more and more frequent. The UK Climate Change Committee highlights that the frequency of such events, including extreme heat waves to devastating rainfall, has increased over the past decade. Statistics reveal an astounding rise in extreme weather patterns, which increases the likelihood of the intensity and severity of these disasters.

Every country has its own relevant conditions prone to their region. The UK is most vulnerable to floods where both coastal areas and those with low-lying regions are at heightened risk, storms, such as Storm Bert, Storm Kathleen and Storm Lilian, landslides and heatwaves. These all pose damage risk causing property and infrastructure damage.

Home and business owners have a responsibility to understand the regional vulnerabilities where they are based and to ensure they are covered in all instances. This may seem almost impossible as these disasters are so unpredictable, yet understanding the potential risks and proactively taking action to safeguard your assets is advisable and financially recommended. Nobody is immune to such natural disasters, therefore one should understand what is and isn’t covered and try to mitigate any potential risks in the future.

It goes without saying that direct costs are usually the first thing to be taken into consideration, as damage can interfere with day-to-day living and business as usual. However, the financial toll of these disasters often extends far beyond the immediate repairs, such as property damage and clearing up. Below are some common direct and indirect costs associated with big natural disasters:

Direct Costs

Indirect Costs

There is often a misconception that homeowners and business owners believe that their standard insurance policies are comprehensive to cover all eventualities including floods or storms. This may ring true for some, yet it is advisable to always be in the know about what your individual policy does in fact cover, or lack thereof. It’s important to know this at time of signing, as you do not want to be left exposed to any significant risk financially.

It’s important to point out that some standard insurance policies may cover basic damages for example, yet only offer limited coverage or within certain time frames, whereas other policies may be comprehensive - it is not a one-size-fits-all when it comes to insurance. Nobody wants to be left in the lurk of the aftermath of a disaster not being covered, so if you need additional coverage, looking at specialised packages can be the way forward to bridge the gap, be it with home or business insurance options.

Waiting until disaster strikes to think about your finances is a dangerous game to play. Financial preparedness and a plan of action is key to surviving the aftermath of a natural disaster or an unexpected event. By taking steps upfront, you can reduce the strain should the unexpected happen. This is crucial to mitigate the economic impact and ensure a smoother recovery process overall.

Navigating the insurance claims process can be daunting at the best of times, and more so following a huge disaster to your property and goods. It’s important to get an understanding when you take out your claim how best to proceed should you need to claim at any point during your policy. This will speed up the process as well as ensure you have everything in check in order to go through the motions.

The key to starting an insurance claim is to document everything with a date and time as it happens / has happened. Take photo and video evidence of the damage and list out all the affected items from the disaster. Contact your insurer as soon as possible following the devastation. Have your insurance policy details to hand as they will ask for your particulars in order to open a claim. Be as specific as possible outlining in as many details as possible the extent of the damage.

Should you proceed on any repairs or clearing up of the damage, track all your expenses, plus any temporary accommodation or disaster-related costs in order to be reimbursed. The insurer may send out a loss adjuster to assess the nature of the damage and document the event from the insurer’s side. It’s important to note that a loss adjuster works in favour of the insurer and not the policyholder.

This is where it can be useful to engage a loss assessor, who is a professional who will work with your best interests in mind. You can instruct a loss assessor at any point in the claims process, so from the get-go or when the negotiations begin or to communicate about a rejected claim. The earlier on in the process, the less stress there will be for the claimant as leaving it in the hands of a professional who thoroughly understands the process is reassuring and can lead to a more swift and successful claim resolution and payout.

Another interesting avenue to look into is that of government programmes and grants from NPOs who may be able to provide financial relief to those who may not have the resources if their coverage is not comprehensive, and need help to rebuild their homes or businesses. There are tens of different schemes available online and thorough research will point you in the right direction.

Natural disasters may not have been on your radar for consideration, yet it’s important for it to accurately reflect in your insurance coverage, due to its unpredictable nature. Being prepared for any eventuality is key to helping mitigate the impact of the disaster. Ensure you thoroughly understand your policies and they are in fact comprehensive and review them on a regular basis.

Don’t wait for disaster to strike to evaluate your current insurance and financial plans ensuring they are adequate as this may be too late. Being proactive and ensuring you safeguard what is yours is key to peace of mind and financial security later on. This is a big ask and may prove an overwhelming process for many, so liaising with Harris Balcombe - expert loss assessors - may be your answer. The team at Harris Balcombe can provide personalised risk assessments and help future-proof your policies to protect you when necessary.

Contact us today and/or start you claim now and let us help you build resilience for whatever challenge the future may hold for you or your business.