Natural disasters are becoming more frequent and severe due to climate change. This has significant financial implications that can affect individuals and communities for years beyond the disaster. In the final episode of the Smart Money podcast’s series on climate change, NerdWallet insurance editor Caitlin Constantine and host Sean Pyles discuss the financial impacts of natural disasters and how individuals can prepare for them.
Obstacles to Preparing for Natural Disasters:
Constantine and Pyles highlight some of the obstacles that prevent people from preparing for natural disasters. These include a lack of awareness, procrastination, and financial constraints. For example, individuals may not realize the risks of natural disasters in their area or may assume it won’t happen to them, leading to a lack of preparedness. Procrastination can also be a factor, as people may put off taking action until it’s too late. Additionally, financial constraints may prevent people from investing in home insurance or making necessary repairs.
Steps to Prepare for Natural Disasters:
To prepare for natural disasters, Constantine and Pyles suggest several steps individuals can take. These include taking inventory of possessions, ensuring adequate home insurance coverage, paying down debt, and developing an emergency plan. Taking inventory of possessions through photos or videos can help with insurance claims and aid in replacing lost or damaged items. Home insurance policies should also be reviewed to ensure they adequately cover potential losses. Paying down debt can also help provide flexibility in the aftermath of a disaster, as individuals may not be able to pay their debts while also recovering financially. Developing an emergency plan that includes communication with loved ones and evacuation procedures can also help individuals prepare for potential disasters.
Financial Recovery After Natural Disasters:
Bulger, senior director of business development for Money Management International, joins the podcast to discuss financial recovery after disasters. She touches upon the obstacles to recovery, such as the loss of important documents and financial records, and the importance of contacting creditors and insurance companies after a disaster. She also highlights the role of financial counseling in helping individuals regain financial stability after a disaster.
– The World Meteorological Organization reports that climate change has caused an increase in weather-related disasters by fivefold over the last 50 years.
– A 2019 report from the Urban Institute found that the financial impacts of natural disasters can lead to lower credit scores, more debt in collections, bankruptcy, and foreclosure.
– Medium-sized natural disasters can sometimes lead to worse financial effects compared to major disasters.
Preparing for natural disasters can have significant financial implications that can last for years beyond the disaster. Taking steps to prepare, such as taking inventory of possessions, ensuring adequate insurance coverage, paying down debt, and developing an emergency plan, can help individuals be better equipped to handle potential disasters. Seeking financial counseling can also be beneficial for individuals who need help regaining financial stability after a disaster.
The Smart Money podcast’s series on climate change has highlighted various financial implications of climate change, from the mental health effects to the impacts on housing and banking. The final episode emphasizes the need for individuals to prepare for natural disasters and the financial impacts they can have. By taking steps to prepare and seeking financial counseling when necessary, individuals can better weather the financial aftermath of a disaster.