Nobody likes thinking about disasters and worst-case scenarios. Here in Arizona, we often think we’re not prone to them. Earthquakes are for people in California, right? And our weather is generally favorable, so we often feel pretty safe.
Unfortunately, we’re not as safe as we think. Monsoons, flash floods, thunderstorms, drought, fires and dust storms top the list of natural disasters most likely to strike Arizona homeowners. That’s why, just like buyers and sellers in other parts of the nation, we here in Arizona need to think ahead about what we would do in case of disaster – natural or otherwise.
KNAU ran a story a while back indicating that between 2006 and 2013, Arizona was 10th most at-risk of natural disasters at a cost over 3.5 Billion in property damage and more than 89 deaths over the 8 year period studied. And as the nation’s 5th largest city, we’re also a top potential target for man-made disasters, whether they be cyber-attacks (most likely) or an attack by a terrorist group or foreign government (least likely).
So how can you stay safe and protect your home and business in case of a disaster?
Do I Have to Pay My Mortgage?
This is the top question on many homeowners’ minds after disaster strikes. The answer, unfortunately, is yes. As a home buyer or seller, one of the most important things you need to know is that even if disaster strikes, you’re still responsible to continue paying your mortgage unless and until forbearance can be arranged.
Physical Safety and Shelter
First things first: every homeowner should know the fastest and safest route to evacuate from their homes if disaster strikes, as well as a meeting point for all family members. Advance planning is especially important here in the Phoenix Valley since the type of disaster we are most at risk of experiencing – flash flooding allows very little time to prepare or respond. You should also ensure the physical safety of your important documents and papers. Some people in flood-prone areas keep them in plastic bins or a safe on an upper floor of their home.
During a disaster, you can find out the nearest emergency shelter by visiting the American Red Cross or by texting SHELTER and your zip code (for example, “SHELTER 01234”) to 4FEMA (43362).
Savings Cushion and Homeowners’ Insurance
A readily accessible financial cushion of 1 to 3 months expenses (more is better) is a must to minimize the impact of a disaster on your finances. If forbearance is offered by your lender, it can take time to arrange; you’ll need enough of a cushion to not only pay the mortgage but also potentially to pay for secondary housing if your home becomes unlivable and you don’t qualify for assistance.
Hazard/homeowners’ insurance is also a must – not only is it required by most lenders, you’ll need it to rebuild if a disaster destroys or damages your home. It is also highly recommended that you have a photographic inventory of all valuables kept on file with your insurer since homeowners’ insurance can cover replacement of these.
Flooding during heavy rains is the most likely disaster to strike Phoenix Valley homeowners, but many homeowners are not aware that damage from flooding is NOT covered by their standard homeowner’s insurance. And flooding is always an issue here in Arizona during monsoon season. Nearly 70% of homes flooded in Hurricane Harvey were not covered by flood insurance – that number would be much higher in Arizona, where less than 2% of homeowners are covered.
Know Who to Call
If disaster strikes, there are Federal programs and agencies available to help.
- FEMA provides housing assistance and grants in case of a presidentially-declared disaster for costs not covered by homeowners insurance, such as temporary housing.
- SBA provides low-interest loans to help business owners recover from damage to their place of business.
- HUD may provide assistance and counseling to homeowners that want to arrange forbearance with their lender.
- FHA provides a 203(h) mortgage insurance program that helps homeowners with the cost of repairs not covered by insurance, or the purchase of a new home.
Don’t Wait for Disaster, Plan Ahead
We can’t prevent disasters from occurring but we can plan ahead to limit their impact. One of the best things we can do to prepare for a disaster is to know our responsibilities and be prepared to carry them out. Having a financial cushion, carrying the proper amount of homeowners and flood insurance, and knowing where to go and who to call in case of disaster, can help you weather any storm – whether natural or man-made.