Hurricane Irma, which made landfall in the Florida Keys as a catastrophically powerful Category 4 hurricane before hitting the mainland as a Category 3, caused roughly $50 billion of damage. Florida’s operating budget, as a state, was around $80 billion when Hurricane Irma hit.

A truly massive storm that has the unfortunate distinction of hitting heavily populated cities and areas can rack up astronomical monetary damages. Even a big state like Florida that collects a lot of revenue and has a big operating budget doesn’t have the funds to shoulder a $50 billion bill.

That’s where the FEMA administered Disaster Relief Fund (DRF) comes into play. The Disaster Relief Fund is a federal government appropriation that FEMA directs as needed to cover the costs some of the response and recovery efforts after a major disaster.

The DRF pays for:

• The restoration and repair of public infrastructure damaged by the disaster
• Financial help for qualifying disaster survivors
• Various disaster mitigation efforts

The fund dates back to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, more commonly referred to as the Stafford Act. The Stafford Act was essentially a souped-up version of the Disaster Relief Act of 1974. The Disaster Relief Act, signed into law by President Richard Nixon, was the law that first allowed presidents to make disaster declarations.

In the early days of the program, up to one hundred independent federal agencies would jump into action when a president made a disaster declaration. The deployment of so many agencies taking their own approach often resulted in a confused, uncoordinated free for all. It wasn’t until 1979 that President Jimmy Carter created FEMA with an executive order that brought all of those disaster efforts under one roof. 

The Stafford Act was itself amended with the Disaster Mitigation Act of 2000. Just under 30 federal agencies and NGOs can be called in to support FEMA when they are activated. The smaller number of players and the more structured command chain allows for a better coordinated approach to disaster response efforts.

The DRF Is Just a Drop in the Bucket from a Property Damage Perspective

The Disaster Relief Fund doesn’t cover every loss. A lot of personal and business property is insured, or it simply doesn’t qualify for reimbursement through the DRF.

These numbers from the insurance industry and FEMA can provide some perspective:

• There were 1,125,588 total claims for Hurricane Irma
• The estimated losses that were insured totaled $20,674,792,954
• 729,786 of the hurricane damage claims were closed with payment
• 348,706 claims, approximately 31 percent, were closed without payment
• Homeowners filed just under 70 percent of all claims
• The federal funding paid to Florida from FEMA was only $2 billion, less than 10 percent of the total paid out by insurance companies

The Florida counties with the most claims included:

1. Miami-Dade with 13.52 percent
2. Collier with 10.04 percent
3. Broward with 9.15 percent
4. Lee with 9.09 percent

Just over 30 percent of the claims came from other parts of Florida that weren’t in the most heavily impacted counties.

The Disaster Relief Fund and the federal government paid:

• $965 million for debris removal
• $550 million for police and fire department overtime
• $132 million for repairing recreational facilities and parks
• $112 million for restoring or replacing equipment and buildings that met the eligibility standards for federal funds
• $112 million for repair on public utilities and infrastructure like the electric grid, water system and sewers
• $51 million of administrative costs
• $43 million on road and bridge repair
• $37 million for repairs of canals, stormwater system and other water control disaster mitigation systems

What Does That Tell Us About Hurricane Damage and Recovery?

Maybe the most important lesson to take is, even when you combine the Disaster Relief Fund money and paid insurance claims, less than half of the total cost of Hurricane Irma in Florida was reimbursed. The rest of the money came out of the pockets of Floridians.

The vast majority of damage caused by a hurricane in Florida will not be eligible for funding through the Disaster Management Fund or other federal programs. States, homeowners and business owners shouldn’t assume the federal government will swoop in and pick up the tab after a hurricane.

Even if your personal or business property does qualify for federal funds or a no-interest or low-interest SBA loan, meeting the eligibility requirements and jumping through the bureaucratic hoops can be difficult.

Hurricanes like Irma are a reminder of how important it is to be insured with the right kind of coverage. Homeowners in Florida in high-risk flood zones should always make sure they have adequate FEMA flood insurance coverage before hurricane season starts. Commercial property owners and homeowners should also take the time before hurricane season to make sure their roofs, windows and doors are in good working order.

Don’t give the insurance company an excuse to deny your claim by saying your property was in disrepair or you don’t have the right kind of coverage. Review your policies and know who to call for help if the insurance company isn’t treating you fairly.