Planet Money Indicator: NPR

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SYLVIE DOUGLIS, BYLINE: NPR.

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ADRIEN MA, HOST:

Devastating floods, intense heat waves – it was a summer of extreme weather – weather conditions that we are seeing more and more due to climate change. And in fact, more than three-quarters of American adults say they have been personally affected by this type of extreme weather in the past five years. We’re talking about hurricanes, wildfires, and yes, floods and heat waves. That’s according to a national survey conducted earlier this year by NPR, the Robert Wood Johnson Foundation and Harvard University.

But there’s another part of this investigation that really caught our attention here at THE INDICATOR, and that’s the money. Many of the people who responded to the survey said their main problem with extreme weather – it’s expensive, and many suffer long-term financial problems because of it. So today on the show, we’re doing something a little special and turning things over to NPR’s daily Short Wave science podcast. After the break, Short Wave co-hosts Aaron Scott and Becky Hersher of NPR’s climate team — they explain what extreme weather means for your wallet.

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AARON SCOTT, BYLINE: Okay, Becky. Thus, most people in the United States say they have experienced extreme weather events – that is, heat waves and hurricanes, floods and wildfires. And I can think of a lot of ways that could cost a lot of money.

REBECCA HERSHER, BYLINE: Yes. Let’s list some of these ways. So I’ll start. The wind from a hurricane could knock the shingles off your roof.

SCOTT: Or a wildfire could burn down your whole house.

HERSHER: Here’s another one you might not think of. It’s really hot, and the electricity goes out, and then all your food goes bad.

SCOTT: If this had happened before.

HERSHER: Yeah.

SCOTT: Or an unprecedented storm could topple the tree in your yard and crush your car. It also happened on my street in April.

HERSHER: Your street looks dangerous.

SCOTT: (Laughs).

Hersher: Yes. So obviously there’s a whole range of things, and some of them are really important, like your house burning down. But one thing the survey made clear is that even medium-sized storms and floods can be quite heavy on a family’s bank account. So it doesn’t have to be these total losses. Nearly a fifth of people who have experienced extreme weather in the past five years said they got into serious financial trouble as a result.

SCOTT: So that suggests it’s not just the people who are impacted by record-breaking weather who are struggling here. It’s actually a much larger group.

HERSHER: Yes, exactly. One of those people was called Jennifer Harris.

JENNIFER HARRIS: Hi, Rebecca. It’s Jenny.

HERSHER: Jennifer is a nurse. She has three children, a husband. She lives in Hampton, Virginia. And she told me that the extreme weather had cost her family a lot of money. So their city is surrounded by water. It’s on the coast. There are rivers and the Chesapeake Bay, which means there are hurricanes. There are thunderstorms, northeast and flooding.

HARRIS: We had roof damage. We suffered damage to the upholstery. We have a shed out back where we had damage to the siding. We had – our fence, we replaced it twice.

SCOTT: Wow, Becky, that sounds expensive. I mean, there are the big items like a roof. Ouch. But I mean, here’s a question. Like, what about insurance? Presumably, Jennifer’s family had insurance on their house.

HERSHER: Yes, absolutely. They have home insurance and special flood insurance, in fact, which, by the way, is one of the big recurring costs they have to deal with in extreme weather conditions. They are required to have flood insurance because they are in a flood zone, but they were not in a flood zone when they bought the house.

SCOTT: Oh, wow.

HERSHER: So climate change brings more risk of flooding, doesn’t it? – which means that more people are in danger and have to pay for the special insurance.

SCOTT: Wow. So that’s something a lot of people are dealing with – those big extra bills for special flood insurance that they didn’t even anticipate when they moved there.

HERSHER: I’ve talked to so many people across the country who have the same problem – you know, increasingly unaffordable flood insurance, in part because of climate change. You know, this is something the government knows about, but Congress has repeatedly failed to address. So it’s a big cost, this insurance. This is on top of their regular home insurance, which you think covers things like damage to your roof or damage to your home’s siding. But one thing the survey revealed is that even if you have home insurance, you’ll likely end up paying for some of the repairs yourself after an extreme weather event.

SCOTT: Yeah. I guess we’ll now dive into the fine print.

HERSHER: Yes, but I promise you it won’t be boring. For example, among those who suffered serious property damage or financial problems after a disaster, more than 70% said they were uninsured or underinsured, meaning that the money they received from their insurance company did not cover most of the repair costs.

SCOTT: Yeah. I have to admit this is something that scares me every time I buy insurance. Like, I’m looking at the numbers saying, you’re insured for that amount. And then I wonder, is that enough? I don’t know what it would cost to rebuild my house.

HERSHHER: That’s right.

SCOTT: So what does it look like if you’re underinsured?

HERSHER: So an example of what that looks like is what happened to Jennifer Harris and her family. You know, a storm damaged their roof.

HARRIS: So basically we assumed that our home insurance would cover everything. But we had a – what was that, baby, a franchise?

HERSHER: So she’s yelling at her husband in the background. But basically, their insurance policy required them to pay out of pocket 10% of the value of their home before the insurance company started paying.

SCOTT: Ten percent of the house – not 10% of the cost of the roof – 10% of the value of the house. It is enormous. I mean, the median home value in the United States, I think, is around $350,000, which means they have to pay $35,000 out of pocket…

Hersher: Yeah. Yeah.

SCOTT: …Which, I mean, is the cost of repairing the roof. Like, who’s got that kind of money sitting around?

HERSHER: I mean, not many people. Jennifer said they were shocked by this – super frustrated. And they didn’t have the necessary savings. So they had to ask his parents for help.

HARRIS: We budget. And I don’t want to give the impression that we are poor. But honestly, we live paycheck to paycheck, and it’s hard to save when something like this happens.

HERSHER: She says it took the family five years to recover financially.

SCOTT: Wow – which begs the question for me – I mean, can this investigation look at what the long-term effects are?

HERSHER: No, but there is research looking at that. Like, there was a study in 2020 that found that natural disasters can lead to lower credit scores, more debt, more mortgage defaults, and people who live in less affluent neighborhoods or neighborhoods where most people are not white are harder hit. So Caroline Ratcliffe – she was one of the authors of this study. She is now an economist at the Consumer Financial Protection Bureau, although she worked at the Urban Institute think tank when she did her research.

CAROLINE RATCLIFFE: Disasters can have the effect of widening existing inequalities, and this will create a greater gap between the haves and the have-nots.

HERSHER: And in fact, this survey confirms that. Thus, households earning less than $50,000 a year suffered from weather-related financial problems at more than four times the rate of those earning more money.

SCOTT: One thing I hear is that it’s very expensive to repair damage or, you know, replace household items that you’ve lost in a forest fire, flood, or other extreme weather event. . But it seems like there’s a lot to be gained from being prepared…

HERSHER: Absolutely.

SCOTT: …You know, like, preventing damage in the first place, right?

Hersher: Yes. Yes, 100%. And I asked Jennifer Harris about this exact thing. She said she would like to feel better prepared for hurricane season. It’s supposed to be even worse this year, according to meteorologists.

HARRIS: It’s expensive to be hurricane ready. That’s the only thing.

SCOTT: That’s right. I mean, even the little things add up.

Hersher: Yeah. And there’s just a lot to pay for. So there are the sandbags to keep the water out of the house. The family has to be prepared to evacuate if there’s a storm, which means either grabbing a hotel room or buying gas to drive, you know, hours and hours to relatives.

SCOTT: Yeah. Gas at today’s prices – ouch.

HERSHER: Also, they need an emergency kit, but Harris says he’s still cannibalized for everyday things.

HARRIS: There are water bottles over there. There are batteries. As soon as Christmas rolls around, I always forget to buy batteries. We dive into this kit and grab the batteries.

SCOTT: (Laughs) Yeah, I get it. So what does all this add up to? Are there things that might help?

Hersher: Yeah. So policies that relieve some of the strain on individuals and families would help. At least that’s what disaster experts say. Things like building houses to be more resilient in the first place, subsidizing that special insurance like flood insurance for people who aren’t as wealthy – things like that would really take over and maybe help be the people to stay solvent as extreme weather becomes more common.

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SCOTT: This episode was produced by Margaret Cirino and Gisele Grayson. It was edited by Gisele Grayson, who is also our Senior Editor. Rachel Carlson fact-checked and the sound engineer was Ko Takasugi-Czernowin. I am Aaron Scott. Thanks for listening to NPR’s Short Wave.

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