While the impact of Hurricane Michael and Hurricane Florence will affect thousands of people for a long time, the impact on the insurance industry is manageable. Residents and businesses in the Carolinas and Virginia hit by Hurricane Florence will be dealing with an estimated $1.5 billion in wind damage and $28.5 billion in flood damage. Since many people choose not to carry flood damage, as much as $18.5 billion of that loss is uninsured. The ratio of wind damage to flood damage is an indication of where the insurance need is. If you live in a location that is at risk of flooding or earthquake or other event, then you need to make sure that you have that type of insurance. And the premiums for flood insurance and earthquake insurance may well exceed your homeowners insurance premium. This is for the very good reason that insurance companies view floods and earthquakes as bigger risks and charge accordingly. It is important to choose your insurance company carefully so that you can make sure that they are able to pay a claim if needed, as Now come the insurance headaches for hurricane victims — a cautionary tale wherever you live.
Hurricane Michael reflects similar ratios of covered damages. Hurricane force winds are estimated to have caused between $6.4 billion and $8.7 billion, while Michael’s storm surge is estimated to have caused between $400 million and $1.3 billion of insurance industry losses (see: Hurricane Michael insured loss up to $10bn: RMS). Many insurance companies no longer provide insurance in Florida which remains the most expensive homeowner’s insurance market in the U.S. It is expected that these types of events will occur every 10 to 15 years. The good news is that according to Analysts: Florida Insurers Can Weather Effects of Michael.
Insureds and insurance companies in Puerto Rico have not fared as well. Insurance companies were faced with nearly 279,000 claims leading one major insurance company to fold and others in danger. The Office of the Insurance Commissioner of Puerto Rico has Insurers Under Scrutiny in Puerto Rico with 13,600 Hurricane Maria Claims Still Open. What’s important to note is that a total of $4.4 billion in claims have been paid. However, 30% of claims were closed without payment which has triggered an audit by the Insurance Commissioner’s office.
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