Tariffs May Push Up Cost of Rebuilding After Florence

28 Sep
Rebuilding Cost Due to Hurricane Florence

Rebuilding Cost Due to Hurricane Florence: One of the largest impacts will be felt in the price of wood, which has already shot up 40 percent from last year.

The latest estimates put the property damage totals from Hurricane Florence at $17 to $22 billion and unfortunately the pain is not going to stop there for many homeowners. The aftermath involves cleaning up, filing insurance claims and rebuilding or repairing their home and lives.

Adding to the bad news is the fact that the tariffs imposed by the Trump administration may drive up the cost of construction materials which will push up the cost of repairing and rebuilding damaged homes in the path of Florence.

According to contractors and homebuilders, the tariffs will not only up the cost of materials such as lumber, steel and aluminum but also countertops, gypsum (a major ingredient in drywall) and even furniture. The tariffs could end up adding 20 to 30 percent to rebuilding costs, certainly bad news for homeowners.

“We’re all going to pay the price for it in terms of higher construction costs,” said Alan Banks, president of the North Carolina Home Builders Association in a recent New York Times article.

One of the largest impacts will be felt in the price of wood, which has already shot up 40 percent from last year. The Trump administration recently added a 20 percent tariff to Canadian softwood lumber. The 25 percent tariff on steel and 10 percent tariff on aluminum have already been impacting builders.

Pain for Insurance Companies and Homeowners

In many cases, the cost of the tariffs will be passed on to insurance companies through higher rebuilding costs. In most cases, this will result in higher premiums for all homeowners in the area, as insurance companies will eventually pass those higher costs on to consumers through higher premiums.

Whenever insurance companies must make major payouts due to a storm there is a good chance premiums will rise in the near future as they look to recover some of their losses. In other cases, some insurers may decide to pull out of the market altogether leaving homeowners scrambling to find new coverage.

The bad news for many homeowners is the fact that much of the damage done by Florence was flooding, which is not covered by a standard homeowners policy. While South Carolina is the second-highest insured state for flooding, roughly 65 percent of homes in flood hazard areas are insured, North Carolina is not as lucky with only 35 percent of at risk homes protected against flooding.

The flooding was so bad during Florence that many homes that fall outside of high risk areas were also flooded, leaving these homeowners on the hook without flood insurance.

According to the New York Times article, of the millions of homes in the Carolinas, only 335,000 are covered by a flood insurance policy.

Tariffs Will Impact Rebuilding

Only two-thirds of the country’s building supplies are produced domestically which means that the recently imposed tariffs will absolutely impact repair and rebuilding costs. Most experts agree that the number one issue will be lumber.

“We’re impacted by all of the tariffs, but lumber is the main one,” said Jerry Howard, chief executive of the National Association of Home Builders in the recent New York Times article. “In a single-family home, lumber is the No. 1 component.”

In addition to lumber, contractors are also concerned about the 10 percent tariff that is now being imposed on $200 billion in Chinese imports. This tariff will go to 25 percent in January if an agreement is not reached by then. The impact of these tariffs extends to many other building supplies including flooring, textiles, drapes, and even ceramic tiles.

Because flooding did most of the damage, many homeowners will be facing higher out of pocket costs as their homeowners insurance will not cover the cost of damage. The tariffs will increase the cost of rebuilding not only for insurance companies but underinsured (no flood insurance) homeowners as well.

Tips for Filing a Claim

Here are a few tips for filing a claim after a major disaster such as Hurricane Florence:

  • File a claim as soon as possible. Many insurers will deal with claims on a first come, first serve basis so getting your claim in as soon as possible is always beneficial. However, don’t rush, be sure to document all of your damage.
  • Document all of your damage. Take photos and videos from a variety of angles. Make necessary repairs to secure your home as insurers will often deny coverage for damage that occurs after the storm if you don’t make temporary repairs. However, never make repairs if the structure of the home is not stable or you will be in danger of injury.
  • Keep notes on all of your interactions with your insurance company representative. Write down your claim number and make general notes on all conversations, noting the name and title of the person you spoke with as well as what was discussed.
  • Keep receipts for all expenses that are related to your claim. These may be for immediate repairs you need to make to secure your home as well as additional living expenses such as hotel, restaurant bills and even dry cleaning. If you are carrying additional living expenses coverage, many of these bills should be covered.
  • Even if you are not carrying flood insurance, contact your insurance company as they will most likely cover some of the damage that is not caused by flooding. While flood damage will be excluded, damage from wind, hail and other weather factors should be covered.
  • Always deal directly with your insurance company. Hurricanes and other disasters will bring scam artists and less than honest contractors to the area. Do not deal with contractors going door to door and always ask for identification from insurance adjusters to verify they are representing your insurance company. Never sign anything that turns over your insurance benefits to a contractor.

Helpful Article: The Do’s and Don’ts of Filing a Home Insurance Claim

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