How to protect your home and wallet from natural disasters [Boss Insurance]

How To Protect Your Home And Wallet From Natural Disasters
Editor’s note:

This article originally appeared on

The recent tornadoes that tore through Sharkey County, Mississippi, left horrific damage: uprooting trees, ripping roofs off houses, smashing some buildings into matchsticks. More than 20 people were killed, an unusually high toll for a single event. Natural disasters cause substantial property and economic damage in the United States each year, but due to the higher quality of buildings, they cause far fewer deaths than similar events in developing countries. According to a 2021 Federal Reserve survey, 16% of Americans experienced disruption in the past year due to natural disasters, with property damage being the most frequently reported event.

Many Americans wonder how to prepare for natural disasters and weather-related events. When I moved to downtown Los Angeles in 2009, my parents were worried that I would be injured in an earthquake. Although my apartment building, built in 1911 as offices and later converted to condos, stood intact for almost 100 years, my parents imagined it falling apart like an accordion. They sent med kits with essentials for a disaster survival kit: solar powered radio, flashlight, first aid kit, plus notes reminding me to keep plenty of water in a bottle at your fingertips.

Predicting the exact time, location and severity of tornadoes, earthquakes and other disasters is impossible, even with the best scientific data and methods. But even in the face of uncertainty, there are several strategies that can reduce risk to our homes, neighborhoods, and financial well-being, with the right information, resources, and advanced planning. At the same time, we should recognize the limits of individual actions and invest in broader community plans.

What risks should you prepare for?

Identifying relevant natural disaster risks is not as simple as it sounds. Many of us could accurately predict that California has a high risk of earthquakes, while Florida is more susceptible to hurricanes. But most parts of the United States face several types of risk. Southern California has a 75% chance of a very large earthquake within the next 30 years. But statistically, earthquakes are not the most likely event: from 1950 to 2017, about 7% of state emergency declarations were related to earthquakes, compared to 40% for floods and 30 % for fires.

Often, the less obvious risks cause the most damage to our homes and infrastructure, precisely because we haven’t prepared for them. The Pacific Northwest traditionally has mild summers and most homes there are not air conditioned. An unexpected heat wave therefore creates greater public health risks, especially for the elderly and other vulnerable groups. Homes in southern states like Texas and Mississippi are typically built to withstand hot weather, but cold snaps can cause pipes to freeze and burst, flooding homes.

Even at small geographic scales, natural geography and features of the built environment affect vulnerability to natural disasters. According to the Environmental Protection Agency’s Interactive Climate Change Mapping Tool, some blocks in downtown Los Angeles have a flood risk below the 50th percentile, while other blocks below a mile away – adjacent to the Los Angeles River – are above the 90th percentile.

Geographic tools that map different types of climate risks at the neighborhood (or even property) level are becoming increasingly available to the general public. But it’s not yet clear how, or even if, people will incorporate this information into their housing decisions. Varying climate risks are unlikely to be the primary driver of location choice for most Americans; people decide which city to live in based on job opportunities, proximity to family and friends, or more favorable climatic aspects like sunshine and warm temperatures.

On a smaller scale, however, climate mapping tools could be useful in nudging people to less risky neighborhoods in their favorite city. A study by real estate firm Redfin suggests that showing potential buyers property-level climate risk scores can encourage them to search for low-risk homes. Perhaps over time, local climate risk will become another neighborhood feature that people look for when deciding where to move or buy a home, such as when mapping subway stations or checking out the local restaurant scene.

Strengthen your home against earthquakes, wind, water and fire

Many high-rise buildings in Historic Downtown Los Angeles date from the 1910s and 1920s, when the neighborhood was home to banks and other financial services. The city’s geographic center shifted west after World War II, leaving dozens of mostly vacant buildings. In the 1990s, as demand for downtown housing began to grow, the city passed an adaptive reuse ordinance that allowed older commercial buildings to be converted into homes.

By then, architects and engineers had developed more efficient and sophisticated construction techniques to protect tall buildings from seismic activity, an important consideration in Los Angeles and the Bay Area. Converting a vacant office building into condos required the developer to upgrade the building to comply with modern building codes. Seismic upgrades are expensive, ranging from $40,000 for small buildings to over $1 million for large ones. But they are very effective at protecting structures – and the people inside – in the event of an earthquake.

Seismic retrofits are just one example of how building technologies, materials and techniques can help guard against natural disasters and weather-related events. As technology has improved, many states have passed building codes requiring new homes to include new safety features, fire-resistant exterior building materials in western states to wind resistant roofs and windows in Florida. But building code changes generally don’t apply retroactively, and many older homes simply aren’t built to withstand today’s climatic stresses without substantial upgrades and ongoing maintenance. Today, the typical American home is over 40 years old – the oldest in our housing stock. Mobile homes (which accounted for about 30% of homes in Sharkey County, MS) are among the most affordable homes in rural areas, but are particularly vulnerable to hurricanes and tornadoes.

Figuring out what kinds of structural upgrades could make your home safer requires both expert advice on technical options and a bit of financial math. For example, pruning vegetation near your home can reduce the risk of damage from wildfires for a relatively modest cost; on the other hand, replacing the wood exterior materials with firebrick could cost upwards of $60,000. Homeowners with good credit and high-value homes may be able to finance these improvements with a home equity loan, but this is neither feasible nor prudent for many people. And renters are generally not allowed to alter the structural features of their homes, although they can ask their landlord to make security upgrades.

Read the fine print of your home or tenant insurance

Mortgage lenders require homebuyers to carry homeowners insurance to protect the value of collateral, but standard policies have limits on what they will cover. Above all, damage caused by earthquakes and floods are not covered. Insurance companies sell specialized policies for natural disasters, but these policies are quite expensive. (Only about 10% of California homeowners have earthquake insurance.) Homeowners in high flood risk areas who have federally backed mortgages are required to purchase flood insurance through the federal flood insurance program, but the increasing frequency and size of insurance payouts due to climate change is creating intense financial pressure on private and public insurance programs.

Renters can – and should – also take out home insurance, which covers the value of their personal belongings. For people who want to live in places where the climate is both risky and attractive (think beachfront property in South Florida), renting offers some advantages over buying. Tenants only commit to stay for the duration of the lease (usually one year), and furthermore, diversified financial assets such as mutual funds are less exposed to climate risk than putting all the savings of a living in the down payment of a single house that could be underwater (literally and figuratively) in 10 years.

Developing risk reduction strategies is easier than implementing them

Developing an action plan for households to reduce their climate and natural disaster risk is only the first step; finding effective ways to encourage and support people in carrying out these plans raises other challenges. Florida had the fastest population growth of any US state in 2022, not because movers ignore hurricanes, but because people love the beaches and the sun. The poor live in at-risk locations, such as flood-prone neighborhoods in Houston, because housing is cheap there and they have few other options.

There are limits to what we can accomplish through individual effort. We will all be safer if we live in neighborhoods where surrounding buildings and infrastructure have been upgraded to withstand natural disasters. Federal disaster recovery programs are poorly designed to provide assistance to vulnerable communities. We also need to address the ways in which our current systems of housing, land use and transportation create environmental damage. Achieving these broader goals will require building broader political coalitions, not just preaching to the choir.

I never needed to use the disaster kit provided by my parents. The biggest earthquake in my five years in Los Angeles happened around 5am, and I slept through the building’s highly efficient seismic retrofits. Or maybe it was just luck.