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Hurricane Ike May Become Hurricane Ike May Become Fourth Most Expensive Fourth Most Expensive Hurricane in U.S. History Hurrican

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Hurricane Ike May Become Hurricane Ike May Become Fourth Most Expensive Fourth Most Expensive Hurricane in U.S. History Hurrican Hurricane Ike May Become Fourth Most Expensive Hurricane in U.S. History September 22, 2008 SHARE THIS DOWNLOAD TO PDF Risk Modeling Estimates Shows Billions of Dollars in Losses INSURANCE INFORMATION INSTITUTE Contact: Press Offices New York: 212-346-5500; [email protected] Washington, D.C.: 202-833-1580 NEW YORK, September 22, 2008 - Hurricane Ike, which made landfall in southeastern Texas on Saturday, September 13, may have caused $9.8 billion in insured damage. This preliminary estimate is based on an Insurance Information Institute (I.I.I.) analysis of the damage assessments by catastrophe risk modeling firms that have examined the situation so far. Billions more in losses are insured through the federal government's National Flood Insurance Program (NFIP). "If the $9.8 billion figure holds, Hurricane Ike will rank as the fourth most expensive hurricane and sixth most expensive insurance event in U.S. history," said Dr. Robert Hartwig, president of the I.I.I. The only other catastrophes that would exceed Hurricane Ike in terms of insured property losses are, in order of severity and adjusted to 2007 dollars, Hurricane Katrina (2005, $43.6 billion), Hurricane Andrew (1992, $22.9 billion), the September 11 terrorist attacks (2001, $22 billion), the Northridge, California earthquake (1994, $17.5 billion) and Hurricane Wilma (2005, $10.9 billion). "Insurers are the nation's economic first responders at a time like this, and thousands of adjusters have arrived in or are making their way to the communities that were damaged severely by Hurricane Ike," said Dr. Robert Hartwig, an economist and president of I.I.I. "Serious windstorm losses will be given priority and claims paid as quickly as possible but hardship cases are usually handled first. If your home has been destroyed or seriously damaged, your agent and company adjuster will do everything possible to ensure your claim is handled expeditiously." Windstorm damage is covered under standard homeowners, renters and business insurance policies. Standard homeowners insurance policies also include coverage for additional living expenses (ALE). This pays the additional costs of temporarily living away from your home if it is uninhabitable due to wind damage, fire, a severe storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. The comprehensive portion of an auto insurance policy covers drivers for flood-related damage to their vehicle. A hurricane deductible was applied to wind damage from Hurricane Ike in coastal areas. Hurricane deductibles are percentage or dollar deductibles that are higher than for other perils, or causes of loss. They are calculated as a percentage of the dollar amount of coverage on the dwelling. The Texas Windstorm Insurance Association (TWIA) wrote many of the wind coverage policies for residential and commercial property owners in the coastal areas impacted by Hurricane Ike. TWIA is the state's insurer of last resort for wind and hail coverage in 14 coastal counties and parts of Harris County. The six hardest hit Texas counties were Brazoria, Chambers, Galveston, Harris, Jefferson and Matagorda. All companies licensed to write property insurance in Texas are required to be members of the TWIA. In the event of a catastrophic storm or a hurricane within the association's coverage territory, all member insurers share in TWIA's losses based on their percentage participation in that policy year. Each insurer's percentage participation is based on their company's statewide sales versus sales within TWIA's territory. Flood damage typically is excluded under standard homeowners, renters and business insurance policies. Flood coverage, however, has been available since 1968 in the form of a separate policy from the federal government's National Flood Insurance Program (NFIP), and from a few private insurers. Texas had the second-highest number of NFIP polices in effect in the U.S. as of June 30, 2008 (662,606). Florida was the only state with more NFIP policyholders. More details on national flood insurance facts and figures, as well as Texas-specific data, can be found in this Policy Statistics report. The most significant flood damage from Ike occurred as the result of the storm surge from the hurricane. Storm surge is generally defined as the rise of water beyond what would be expected by its normal movement due to tides. The NFIP routinely pays storm surge related claims. Virtually every federal and state court that has examined the issue of storm surge in recent years has ruled that losses incurred by storm surge are flood-related and are excluded from coverage under the standard homeowners policy. For more information about insurance, go to the I.I.I. Web site. The I.I.I. is a nonprofit, communications organization supported by the insurance industry. Back to top.
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