Disaster Proof: Protecting Consumer Financial Health with Emergency Savings

July 3, 2024 | Kelly Anonson, Chief Distribution Officer, Recoop

Whether facing threat of pandemics, foreign/domestic unrest and natural disasters, having an emergency fund is critical to a company’s short- and long-term success. A common threat to your business’ and employees’ livelihoods is natural disaster. Tornadoes, hurricanes, earthquakes, wildfires and winter storms can leave your teams struggling to meet their most basic needs and your business millions.

The risk is real. According to the National Centers for Environmental Information, the contiguous U.S. states suffered 28 separate billion-dollar weather and climate events in 2023 – the most ever recorded. These disasters caused widespread destruction and damage leaving some communities in ruin and millions of consumers facing internet, power and other utility outages. And while these events can feel like the extreme, it’s indicative of the rising risk and costs of severe weather events as well as their ubiquity. Recent data from Rebuild by Design shows that 90% of U.S. counties suffered a weather disaster between 2011 and 2021. Over the last five years, at least one weather-related disaster was declared in all 50 states.

These costs are concerning when we start to explore the state of the family. Most American households are unprepared to weather an unexpected expenditure. Nearly 6 in 10 U.S. adults are uncomfortable with their level of emergency savings and 27% said they have no emergency savings at all. These trends indicate that many American workers riskfinancial ruin in the wake of a natural disaster when out of pocket recovery costs are high.

Add to this the harsh truth that few homeowners are aware of the gaps and limitations of their current homeowner insurance policies or how long it might take for their claim to be approved and receive their benefit following a disaster. They may also be unaware that disaster deductibles can cost anywhere between 2 – 20% of a home’s value or of the underinsured exposure they may have when taking into account the rising cost of materials and the increased demand and cost for labor and supplies.

To address this pain point, some employers are starting to make disaster insurance offerings available as part of their employee benefit program to help victims of natural disaster access faster and more flexible funds to protect their financial wellness. These insurance solutions are limited and may not be something the general consumer is aware of or understands how to access, so employers play a pivotal role in sourcing and implementing these offerings for employees.

This is what Recoop Disaster Insurance was created to do: fill the costly coverage gaps left by most homeowners and renters insurance policies, which in many cases can soar as high as $54,0001. This first-of-its-kind benefit pays employees up to $25,000 in cash, which they can use however they see fit to get their family back on their feet again. Think of it like a supplement to standard homeowners and renters policies.

This kind of backing helps gift employees peace of mind, helping them weather the financial storms ahead. Disasters are the 5th most common cause of bankruptcies in the U.S.2 and Recoop’s cash payout can help teams relieve the financial burden and support their mental health. The average employee spends 13 hours a month worrying about personal finances at work3. With fast access to post-disaster recovery cash, Recoop lessens both the financial and mental toll.

It also safeguards your business’ bottom line by protecting long-term productivity. An express cash benefit helps employees recover faster to ensure they can return to work. And with the potential for thousands to be displaced from their homes and jobs, Recoop policies offer security and stability, while also helping your staff feel connected, and cared for, by their company.

While we cannot mitigate all the risks Mother Nature can bring, we can have awareness and plan for the financial implications that come with disaster. By offering solutions for an emergency fund that can support an employee’s ability to protect their overall financial well-being and productivity.

To learn more about how Recoop can help provide an emergency fund and bolster employee financial resilience, visit BuyABI | Recoop Enroll (recoopinsurance.com)

1 Based on average home value in Feb. 2021. Source: Zillow, Nationwide, CoreLogic.
2 Clear Bankruptcy
3 Mercer