Living in the beautiful city of Charleston, storm risk isn’t a once-in-a-lifetime event — it’s an annual reality.
Hurricane season officially begins June and runs through November 30, and every year brings a new round of uncertainty. But when I first start working with many clients, budgeting for hurricanes, flood insurance and storm repairs still feels like something they’ll “deal with later.”
As a flat-fee financial planner based on the South Carolina coast, I’ve had to help clients face the real costs of coastal living. Over the years, I’ve learned this topic needs to be handled early, and sometimes with a dose of tough love. Not everyone likes the numbers, but ignoring them doesn’t make the water stop rising.
When the Forecast Turns Financial
A few years ago while at my previous firm, I started working with a couple who had just purchased a vacation home near Folly Beach. But because the property wasn’t in a (Federal Emergency Management Agency (FEMA) high-risk flood zone, their mortgage company didn’t require flood insurance — so they skipped it. Wind coverage was limited, too. They wanted to keep costs “reasonable.”
Then Hurricane Ian rolled through the Low Country. The Category 1 storm didn’t flood their house, but wind and water damage to their screened porch and detached garage racked up more than $18,000 in out-of-pocket repairs. The repairs were needed as they were wrapping up a kitchen renovation, and coincided with a stock-market selloff, so the timing couldn’t have been worse. This was a wake-up call for change.
We reviewed the couple’s overall property exposure for both homes, and restructured their insurance and cash reserves. They added full flood and wind coverage on their primary and vacation properties.They also began maintaining a $25,000 “resilience fund” within a conservative portion of their investment portfolio. These steps helped protect their assets and retirement plan, and provided much needed peace of mind.
Flood insurance and storm prep look different for each client. I start by evaluating four key factors:
1. Proximity to Water
Homes near tidal creeks or the coast are a different story than those a few miles inland. I pull FEMA flood maps, elevation certificates, and even check if my clients reside in an evacuation zone. If they’re not required to carry insurance, I ask, “Could you afford to rebuild or repair without coverage?”
2. Primary vs. Vacation Residence
Clients tend to insure their main home more thoroughly than their second home, which makes sense emotionally but can be a mistake financially. A roof doesn’t care if it’s your weekend getaway.
3. Insurance Premiums and Tradeoffs
Risk Rating 2.0, the updated pricing methodology used by the National Flood Insurance Program (NFIP), which is managed by FEMA, has caused major premium jumps. Rather than just looking at where a property is located on a flood map, it considers a property’s unique flood risk. I’ve had clients quoted $3,000 to $5,000 for flood insurance alone, and that’s before wind coverage. Sometimes we look at higher deductibles or risk-sharing strategies to make premiums more manageable.
4. Cash Flow and Liquidity
For clients with strong cash flow or large taxable accounts, we can build in a self-insurance buffer. But I always show them side-by-side, “Here’s what you’d pay in premiums vs. the downside if a storm hits.” That visual tends to resonate more than the concept.
“It’s Never Happened Before” Isn’t a Plan
I’ve spoken with homeowners near the coast who consider dropping windstorm coverage after a stretch of calm seasons. The logic is usually: “We’ve been lucky so far.” But when you model an $80,000 uninsured storm loss early in retirement and show how that impacts long-term cash flow, the conversation shifts quickly. That’s the value that you bring as a financial planner, helping people understand the consequences before they live through them.
How I Build It into the Budget
Here’s what I typically walk clients through when budgeting for these risks:
Annual Insurance Audit — Review all insurance coverage — property, homeowners, flood and wind. I refer to local independent agents to price out options. In coastal areas, I’ve found that bundling isn’t always the best deal.
Estimate Annualized Risk Expenses. If insurance doesn’t cover something specific to the clients’ property, we build a separate reserve. I typically recommend setting aside $10,000 to $25,000, depending on the property type, location and history.
Stress-Test the Plan. Can their plan withstand two storms in three years? Or a $50,000 claim that isn’t covered? We model that. And if it breaks the plan, we find ways to fix it now.
Plan for Inflation. Premiums and building costs aren’t rising at 2% annually; they’re actually rising at closer to 6% to 8% a year, in my experience. So, we increase these budget items at a faster pace than normal living expenses.
How I Protect Myself
My wife and I live on Johns Island, just south of the downtown Charleston peninsula. Not oceanfront, but still flood-prone. We carry flood insurance even though it’s not required, and we’ve set aside a reserve for unexpected home repairs. I tell clients that upfront. It builds trust when they know I’m not just giving advice, I’m implementing it in my own financial plan.
For Advisors: Make Insurance Part of the Conversation
Storm-proofing is one of those topics that’s easy to put off, but expensive to ignore. I recommend every advisor with coastal clients build this into annual reviews. Ask:
Have you reviewed your property coverage recently?
Do you know what your policy doesn’t cover?
If a major storm hit this year, how would you cover the damage?
If clients aren’t convinced that this is a real threat to their financial plan, run a scenario, tell a story, and make it real. Because at some point, the storm will come. And when it does, your clients will remember who helped them prepare.
Christopher Jackson, CFP®, is the founder of CPJ Financial, an independent, flat-fee, fiduciary financial planning firm based in Johns Island, S.C.. He specializes in helping high-income millennials and retirees build intentional and actionable financial plans that support their current lifestyle, long-term financial goals and life goals.. Reach him at chris@cpjfinancial.com or visit cpjfinancial.com.
