Insurance to cover little of Irene's damage
Hurricane Irene could be one of the ten costliest disasters in the history of the United States and since much of the damage was caused by flooding, insurance will cover little; in previous storms, insurance companies usually cover about half the total losses, but according to the Kinetic Analysis Corporation, insurers will likely cover less than 40 percent of costs
Hurricane Irene could be one of the ten costliest disasters in the history of the United States and since much of the damage was caused by flooding, insurance will cover little.
Preliminary estimates project that the hurricane caused $7 to $10 billion worth of damage across a wide swath of the East Coast. In previous storms, insurance companies usually cover about half the total losses, but according to the Kinetic Analysis Corporation, insurers will likely cover less than 40 percent of costs.
Much of the damage was caused by flooding and not wind, which is excluded from many standard policies and it is uncertain how many homes have flood insurance. In addition deductibles have risen sharply in coastal areas in recent years with some insurers requiring homeowners to cover $4,000 worth of damages before the policy kicks in.
Jan Vermeiren, the CEO of Kinetic Analysis, said the lack of insurance could make it difficult for homeowners to rebuild and could hamper the short-term economic boost the construction industry generally receives following a major storm.
“Especially now that the economy is tight, and people don’t have money sitting around, local governments are broke, and maybe people can’t even get loans from the banks,” said Vermeiren.
On Tuesday, the governors of New York, New Jersey, and Connecticut sought expedited disaster declaration from the federal government in the hopes of receiving additional federal aid.
In a letter to President Obama, New York governor Andrew Cuomo said that he had seen “hundreds of private homes either destroyed or with major damage and an enormous amount of public infrastructure damage.”
Meanwhile Chris Christie, the governor of New Jersey, wrote the president that “immediate federal assistance is needed now to give New Jersey’s residents a helping hand at an emotionally and financially devastating time.”
Upstate New York and Vermont are currently inundated in flood water and several communities have been entirely cut off from power and running water forcing the National Guard to airlift critical supplies to the beleaguered towns. In addition, the hurricane destroyed cotton and tobacco crops in Virginia and North Carolina with its flood waters, temporarily stopped shellfish harvesting in Chesapeake Bay, and forced the New York City subways to completely shut down.
