When a homeowner experiences significant damage to their house from a natural disaster, there are certain steps they need to take. It’s the type of damage that can result from wildfires, floods, hurricanes, tornadoes and more. It’s possible for a standard home insurance policy to not cover damage caused by a natural disaster. It’s important for a homeowner to know how their particular policy provides coverage for “acts of God.”
Supplemental Disaster Insurance
This is made available to property owners who have a house located in an area considered at-risk for natural disasters. This type of coverage could significantly increase premiums. The amount paid for this coverage must be compared to the cost of replacing a home and the likelihood of such a disaster occurring.
Contact Insurance Company
Immediately after a natural disaster, a homeowner should assess the damage and get to a place that is safe. Once a homeowner can contact the outside world, they should contact their insurance company. If possible, a homeowner should review their homeowner’s insurance policy and determine if they have coverage.
A homeowner needs to determine if they’re able to continue paying the mortgage. If they are not able to make payments for a period of time, they should immediately contact their mortgage servicing company. This may be a time to ask for a mortgage forbearance. If this is granted, a homeowner can keep their property and not be required to make payments for a specified amount of time. It may also be possible to only make partial payments for an agreed upon length of time. A forbearance may last for six months and be extended if necessary. Interest will continue to accrue, but a homeowner will not be charged any late fees. When the forbearance period is over, a homeowner may be required to pay a larger monthly payment for a few years.
Small Business Administration (SBA)
The SBA is responsible for handling loans associated with a disaster to businesses as well as individuals and families. They are able to provide loans at acceptable rates for the repair or replacement of primary residences. It is possible to borrow more than $190,000 to cover construction as well as renovation costs. If a person is a renter or homeowner, they will be able to get over $39,000 to replace personal property. This will include appliances, office equipment, furniture and more.
FEMA is able to provide grants to cover the gap between an insurance payout as well as SBA loan. These grants can amount to more than $33,000 for a household for each fiscal year. This money may be used for home repairs that are not covered by a person’s insurance policy. It can also be used for child car, temporary rent as well as medical expenses resulting from the natural disaster and more.
If a person is living in a home that is in foreclosure, their mortgage servicer may get guidance from a federal agency on how to handle the situation. The FHA, Freddie Mac, VA as well as Fannie Mae have been able to suspend the foreclosure on a home for up to 90 days.
Should a disaster cause damage to a home between the appraisal and closing, the mortgage holder must evaluate the house. A lender must take necessary actions to evaluate the condition of the property involved in the sale. It must be determined if the property’s condition has materially changed since the effective date of the appraisal report. Should the damage be minor, it may be covered by the homeowner’s insurance policy. If the damage is significant, the house may be required to be completely repaired prior to the mortgage going through.
When people have their homes damaged by a natural disaster, it will be a time to work with the insurance company, mortgage companies as well as government agencies and more. Thousands of people survive natural disasters and rebuild their homes each year with assistance from organizations designed to help them.
by: Mark Palmer