Personal Finance

How to file a homeowners insurance claim after Hurricane Helene, Milton

Published

1 week ago

October 8, 2024

David Hester inspects damages of his house after Hurricane Helene made landfall in Horseshoe Beach, Florida, on September 28, 2024.

Chandan Khanna | Afp | Getty Images

It’s crucial to understand how to file a homeowners insurance claim after a natural disaster.

Insured losses alone for Hurricane Helene are now estimated at more than $6 billion.

Meanwhile, analysts anticipate that Hurricane Milton could be a “once-in-a-century” storm with the potential to generate record-breaking damage when it makes landfall along Florida’s west coast on Wednesday.

Once you’re safely out of harm’s way, starting the insurance claim process is an important consideration. The sooner you report a claim, the sooner your insurance company can start the process and you can begin rebuilding, experts say.

“Your adjuster is assigned on a first-come, first-serve basis,” said Shannon Martin, a licensed insurance agent and analyst for Bankrate.com.

The processing arm of your insurance company is going to have a “tremendous amount of paperwork and claims coming through,” said Jeremy Porter, head of climate implications research at First Street Foundation, an organization focused on climate risk financial modeling in New York City.

“The longer you wait, you’re not only delaying the ability to have your claim approved and make its way to you, but you’re lengthening the time in which that claim will sit in the processing pipeline,” Porter said.

Here are three important steps to quickly file an insurance claim after a disaster, according to experts.

1. Call your insurer as soon as you can

Experts recommend including copies of your insurance policies and contact numbers in a disaster preparedness kit, that goes with you if you evacuate and is securely stored, otherwise.

Once a disaster has passed, immediately contact your insurance company to let them know that your home has damage from a recent disaster and you’d like to start the claims process, said Porter.

If you evacuated, “you can start the claim from anywhere,” Porter said. “You’ll eventually have to schedule with the insurance company to actually review and inspect the damage.”

But if you decide to wait out the storm in your house, you need to first prevent further damage to the home before calling, said Bankrate.com’s Martin.

A typical home insurance policy has language requiring homeowners to lessen the impact and prevent further damage, she said.

“Then you can call the insurance company, take pictures of the damage and [move] items into safer locations,” Martin said.

2. Make a log of damages

During your call, provide your insurance company with some initial details, like if your roof blew off or several windows broke, said Porter.

“But they really won’t make their assessment until they come in and inspect the damage,” he said.

While the insurer will make its own inspection, it’s always important to document your damages, including taking pictures, so that you can align that with the formal inspection record that comes out from the insurance company, Porter said.

This way, you can dispute any claims if you have to later, he said.

3. Keep a record of receipts

In the event of a loss, you have to give prompt notice to your insurer and you have a duty to protect the property, said Daniel Schwarcz, an insurance law professor at the University of Minnesota Law School.

You have to protect the property from further damage after the storm, make reasonable repairs and have an accurate record of repair expenses, Schwarcz said.

The receipts that you need to keep on file are for purchased materials used to prevent further damage on the property that’s already been damaged by a covered peril, said Schwarcz — meaning wind and trees, but not generally flooding unless you have a flood insurance policy. The insurer will generally reimburse you for reasonable expenses you incur.

If you don’t take such measures after the storm, and that inaction results in further damage, the insurer is not obligated to cover the loss, he said.

Materials purchased to protect the home before the natural disaster — for example, plywood to cover windows — are oftentimes not covered.

You also want to keep a record of receipts when you start working with contractors to rebuild from the damage, experts say.

Differentiating damage from back-to-back disasters

One of the reasons why you want to document the damage immediately with your insurer is so that you can attach it to the event itself, increasing the likelihood of the event being covered by your home insurance, said Porter.

“Filing the claim immediately is the number one most important thing to do,” Porter said.

It’s important to keep track of where the damage came from, and having evidence can help avoid problems down the road, he said.

Port offers the hypothetical of of someone whose home sustained wind damage from Hurricane Debbie or Helene, but hasn’t filed a claim before the Milton makes landfall and causes flood damage.

“All of a sudden, you have a problem where the National Flood Insurance Program, which covers flood, and your home insurance company, which covers wind, can potentially start to argue over what actually caused the damage to the property,” Porter said.

You want to make sure you file any claim within three to five days of when the incident occurred, said Martin. As long as you had submitted all of your information in a timely manner for the first incident, if something else arises, you’re able to show the adjuster that it happened from a second event, she said.

Personal Finance

There’s a key change coming to 401(k) catch-up contributions in 2025

Published

56 mins ago

October 16, 2024

Business Finance News

Aire Images | Moment | Getty Images

Many Americans face a retirement savings shortfall. However, setting aside more money could get easier for some older workers in 2025.

Enacted by Congress in 2022, the Secure Act 2.0 ushered in several retirement system improvements, including updates to 401(k) plans, required withdrawals, 529 college savings plans and more.

While some Secure 2.0 changes have already happened, another key change for “max savers,” will begin in 2025, according to Dave Stinnett, Vanguard’s head of strategic retirement consulting.

Some 4 in 10 American workers are behind in retirement planning and savings, according to a CNBC survey, which polled roughly 6,700 adults in early August.

But changes to 401(k) catch-up contributions — a higher limit for workers age 50 and older — could soon help certain savers, experts say. Here’s what to know.

Higher 401(k) catch-up contributions

Employees can now defer up to $23,000 into 401(k) plans for 2024, with an extra $7,500 for workers age 50 and older.

But starting in 2025, workers aged 60 to 63 can boost annual 401(k) catch-up contributions to $10,000 — or 150% of the catch-up limit — whichever is greater. The IRS hasn’t yet unveiled the catch-up contribution limit for 2025.

“This can be a great way for people to boost their retirement savings,” said certified financial planner Jamie Bosse, senior advisor at CGN Advisors in Manhattan, Kansas.

An estimated 15% of eligible workers made catch-up contributions in 2023, according to Vanguard’s 2024 How America Saves report.

Those making catch-up contributions tend to be higher earners, Vanguard’s Stinnett explained. But they could still have “real concerns about being able to retire comfortably.”

More than half of 401(k) participants with income above $150,000 and nearly 40% with an account balance of more than $250,000 made catch-up contributions in 2023, the Vanguard report found.

Roth catch-up contributions

Another Secure 2.0 change will remove the upfront tax break on catch-up contributions for higher earners by only allowing the deposits in after-tax Roth accounts.

The change applies to catch-up deposits to 401(k), 403(b) or 457(b) plans who earned more than $145,000 from a single company the prior year. The amount will adjust for inflation annually.

However, IRS in August 2023 delayed the implementation of that rule to January 2026. That means workers can still make pretax 401(k) catch-up contributions through 2025, regardless of income.

Roth conversions on the rise: Here's what to know

Personal Finance

Holiday shoppers plan to spend more, while taking on debt this season

Published

2 hours ago

October 16, 2024

Business Finance News

Increase in consumer holiday spending expected this year, says Mastercard's Michelle Meyer

Americans often splurge on gifts during the holidays.

This year, holiday spending from Nov. 1 through Dec. 31 is expected to increase to a record total of $979.5 billion to $989 billion, according to the National Retail Federation.

Even as credit card debt tops $1.14 trillion, holiday shoppers expect to spend, on average, $1,778, up 8% compared to last year, Deloitte’s holiday retail survey found.

Meanwhile, 28% of holiday shoppers still haven’t paid off the gifts they purchased for their loved ones last year, according to another holiday spending report by NerdWallet.

How shoppers pay for holiday gifts

Heading into the peak holiday shopping season, 74% of shoppers plan to use credit cards to make their purchases, NerdWallet found.

Another 28% will tap savings to buy holiday gifts and 16% will lean on buy now, pay later services. NerdWallet polled more than 1,700 adults in September.

Buy now, pay later is now one of the fastest-growing categories in consumer finance and is only expected to become more popular in the months ahead, according to the most recent data from Adobe. Adobe forecasts BNPL spending will peak on Cyber Monday with a new single-day-record of $993 million.

However, buy now, pay later loans can be especially hard to track, making it easier for more consumers to get in over their heads, some experts have cautioned — even more than credit cards, which are simpler to account for, despite sky-high interest rates.

The problem with credit cards and BNPL

To be sure, credit cards are one of the most expensive ways to borrow money. The average credit card charges more than 20% — near an all-time high.

Alternatively, the option to pay in installments can make financial sense, especially at 0%.

And yet, buy now, pay later loans “are just another form of credit, disguised as something for free,” said Howard Dvorkin, a certified public accountant and the chairman of Debt.com.

The more BNPL accounts open at once, the more prone consumers become to overspending, missed or late payments and poor credit history, other research shows.

If a consumer misses a payment, there could be late fees, deferred interest or other penalties, depending on the lender. In some cases, those interest rates can be as high as 30%, rivaling the highest credit card charges.

“This is just another way for financers to put their hands in the pocket of consumers,” Dvorkin said. “It’s a trojan horse.”

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Personal Finance

Here’s why the U.S. retirement system isn’t among the world’s best

Published

6 hours ago

October 16, 2024

Business Finance News

Mixetto | E+ | Getty Images

The U.S. retirement system doesn’t get high marks relative to other nations.

In fact, the U.S. got a C+ grade and ranked No. 29 out of 48 global pension systems in 2024, according to the annual Mercer CFA Institute Global Pension Index, released Tuesday. It analyzed both public and private sources of retirement funds, like Social Security and 401(k) plans.

A similar index compiled by Natixis Investment Management puts the U.S. at No. 22 out of 44 nations this year. Its position has declined from a decade ago, when it ranked No. 18.

“I think [a C+ grade] would describe a rating where there is a lot of room for improvement,” said Christine Mahoney, global retirement leader at Mercer, a consulting firm.

The Netherlands placed No. 1, followed by Iceland, Denmark and Israel, respectively, which all received “A” grades, according to Mercer. Singapore, Australia, Finland and Norway got a B+.

Fourteen nations — Chile, Sweden, the United Kingdom, Switzerland, Uruguay, New Zealand, Belgium, Mexico, Canada, Ireland, France, Germany, Croatia and Portugal — got a B.

CNBC Retirement Survey: 44% of workers are 'cautiously optimistic' about reaching retirement goals

Of course, retirement systems differ since they address a nation’s unique economies, social and cultural norms, politics and history, according to the Mercer report. However, there are certain traits that can generally determine how well older citizens fare financially, the report found.

The U.S. system is often referred to as a three-legged stool, consisting of Social Security, workplace retirement plans and individual savings.

The lackluster standing by the U.S. in the world is largely due to a sizable gap in the share of people who have access to a workplace retirement plan, and for the ample opportunities for “leakage” of savings from accounts before retirement, Mahoney said.

Employers aren’t required to offer a retirement plan like a pension or 401(k) plan to workers. About 72% of workers in the private sector had access to one in March 2024, and about half (53%) participated, according to the U.S. Bureau of Labor Statistics.

“The people who have [a plan], it’s probably pretty good on average, but you have a lot of people who have nothing,” Mahoney said.

By contrast, some of the highest-ranked countries like the Netherlands “cover essentially all workers in the country,” said Graham Pearce, Mercer’s global defined benefit segment leader.

Additionally, top-rated nations generally have greater restrictions relative to the U.S. on how much cash citizens can withdraw before retirement, Pearce explained.

American workers can withdraw their 401(k) savings when they switch jobs, for example.

About 40% of workers who leave a job cash out “prematurely” each year, according to the Employee Benefit Research Institute. A separate academic study from 2022 examined more than 160,000 U.S. employees who left their jobs from 2014 to 2016, and found that about 41% cashed out at least some of their 401(k) — and 85% completely drained their balance.

Employers are also legally allowed to cash out small 401(k) balances and send workers a check.

While the U.S. might offer more flexibility to people who need to tap their funds in case of emergencies, for example, this so-called leakage also reduces the amount of savings they have available in old age, experts said.

“If you’re someone who moves through jobs, has low savings rates and leakage, it makes it difficult to build your own retirement nest egg,” said David Blanchett, head of retirement research at PGIM, Prudential’s investment management arm.

Social Security is considered a major income source for most older Americans, providing the majority of their retirement income for a significant portion of the population over 65 years old.

To that point, about nine out of 10 people aged 65 and older were receiving a Social Security benefit as of June 30, according to the Social Security Administration.

Social Security benefits are generally tied to a worker’s wage and work history, Blanchett said. For example, the amount is pegged to a worker’s 35-highest years of pay.

While benefits are progressive, meaning lower earners generally replace a bigger share of their pre-retirement paychecks than higher earners, Social Security’s minimum benefit is lesser than other nations, like those in Scandinavia, with public retirement programs, Blanchett said.

“It’s less of a safety net,” he said.

“There’s something to be said that, as a public pension benefit, increasing the minimum benefit for all retirees would strengthen the retirement resiliency for all Americans,” Blanchett said.

That said, policymakers are trying to resolve some of these issues.

For example, 17 states have established so-called auto-IRA programs in a bid to close the coverage gap, according to the Georgetown University Center for Retirement Initiatives.

These programs generally require employers who don’t offer a workplace retirement plan to automatically enroll workers into the state plan and facilitate payroll deduction.

A recent federal law known as Secure 2.0 also expanded aspects of the retirement system. For example, it made more part-time workers eligible to participate in a 401(k) and raised the dollar threshold for employers to cash out balances for departing workers.