After the Flood: Hurricane Harvey’s $180 Billion Impact on Houston’s Economy

The destruction from Hurricanes Harvey, Irma, and Maria is virtually unprecedented. In fact, Harvey and Irma are the only Category 4 storms to hit the U.S. in the same year (let alone the same two-week span), and Maria made landfall in Puerto Rico as a Category 4 storm as well. The 100-plus mile-per-hour winds are bad enough, but the flooding in the areas hit by these storms reached near-Biblical proportions. Hurricane Harvey managed to dump 27 trillion gallons of water on Texas and Louisiana; parts of Houston received nearly 53 inches of rain during that time.

It’s no surprise that local residents have found themselves in desperate need of help, especially when it comes to rebuilding their homes and businesses. The Houston Builders Association estimates that 30,000 homes in the city were damaged. In addition, approximately 200,000 homes throughout the state of Texas will need to be repaired or rebuilt. And unfortunately, these “acts of God” are often not covered under standard homeowner’s insurance policies.

RMS, a catastrophe modeling company, estimates that $25 to $35 billion of the damages caused by Hurricane Harvey will be covered by insurance. However, the total amount of economic damage — which includes uninsured losses — may reach $70 to $90 billion. That means contractors and construction firms will be more in-demand than ever, but many contractors may find themselves in trouble following these types of disasters, too.

Although events like these may be difficult to predict, there are certain things contractors can do to protect themselves from storm damage during and following the construction process. By working with a construction lawyer to include force majeure provisions in contracts and investing in builder’s risk insurance, business owners and independent contractors will often safeguard their investments in calamitous situations.

Considering that the cost of cleanup from Harvey may eventually reach $180 billion, preparation and prevention is clearly the best way to go, particularly if you conduct business in locations that are prone to significant storm damage. While you may not be able to stave off the actual storm, including construction law components in contracts and purchasing better insurance policies may keep your business or home from going under.