What to consider when your home and finances are impacted after a natural disaster

Insurance coverage gaps. Many homeowners discover their insurance doesn't fully cover rebuilding costs. Replacement cost estimates from insurance companies often use nationwide or regional averages that don't reflect actual local construction costs. High-value properties are particularly vulnerable to this gap. Understanding the difference between your insurance payout and actual rebuild costs is critical before committing to this path.

Timeline expectations. Custom home construction typically takes 12 to 24 months under normal circumstances. After a major disaster, expect longer timelines due to
permit backlogs, contractor shortages, material delays and increased demand. You'll need stable temporary housing throughout this period.

Building codes and requirements. Post-disaster building codes often become more stringent, particularly around fire resistance, seismic safety or flood elevation requirements. These updates can add unexpected costs to your project but may also make your rebuilt home more resilient and insurable.

Tax implications. Moving to a different state can have significant tax consequences. Some states have no income tax while others tax retirement income, capital gains or estates differently. Work with your tax advisor to understand how a move might affect your overall financial picture.

Estate and legacy planning. If you're not rebuilding, you'll need to decide what to do with your damaged property. Selling the land, holding it for future use or passing it to heirs each have different financial and estate planning implications. Your attorney can help you think through the best approach for your family.

Finding community in a new place. While the financial and logistical aspects of relocating are important, don't underestimate the value of community. Think about how you'll build new relationships and support systems in an unfamiliar area.

Market conditions and competition. After a major disaster, housing inventory in affected and nearby areas often becomes extremely tight. This can drive up prices and create bidding wars. Be prepared for a competitive market, but don't let urgency push you into a decision you'll regret.

Financing strategy. Deciding whether to pay cash or finance your purchase depends on your overall financial picture. Your advisor can help you evaluate options like using securities-based lending for a quick cash purchase while you arrange longer-term financing, tapping home equity from other properties or securing a traditional mortgage.

Insurance coverage is often the starting point. The amount of insurance you have relative to rebuild costs fundamentally shapes your options. If you're well-insured and can rebuild comfortably, that may be the natural choice. If there's a significant gap between insurance proceeds and rebuild costs, buying an existing home or relocating might make more financial sense.

Family needs and schools matter deeply. "Schooling was the biggest decision point," says Justin Crichlow, a Merrill financial advisor who relocated after losing his home. Parents who wanted to maintain continuity for their children during a traumatic time often prioritized staying near their kids' existing schools and social networks. If your children's school also was damaged or if you don't have school-age children, you may have more flexibility to consider relocation.

Time and energy for a rebuild vary. Managing a custom home construction project requires significant time, decision-making and emotional energy. Some people find the process of creating their dream home from scratch to be empowering and healing. Others find it overwhelming when they're already dealing with so much else. Be honest with yourself about what you can realistically handle.

Future risk and insurability. Some areas become difficult or impossible to insure after major disasters. Consider whether you'll be able to get adequate coverage in your original location and what that might cost. This calculation affects both rebuild and buy-in-the-same-area decisions.