Hurricane Katrina – 5 Yr Anniversary

A Take a look at the Numbers

In July of 2010, the Insurance coverage Data Institute (I.I.I.) launched its report concerning the injury and insurance coverage claims on the level of the 5 12 months anniversary of hurricane Katrina. Within the report, the I.I.I. discloses that Katrina, 5 years later, stays the biggest “single loss” occasion ever to happen to the worldwide insurance coverage trade. The numbers inside the report are staggering:

  1. Hurricane Katrina brought about an estimated $41.1 billion in insured injury to each people and companies.
  2. The Nationwide Flood Insurance coverage Program (NFIP) insured $16.1 billion in losses. This quantity shouldn’t be included within the insured damages determine above.
  3. The whole quantity of insured disaster losses attributable to Katrina ($61.9 billion) is the best annual insured disaster loss ever skilled.
  4. A lot of the claims generated by Katrina (1.2 million of the 1.7 whole claims) have been for injury to private property.
  5. By the second 12 months after the hurricane, 99 % of the non-public property claims had been settled by insurers.

As you possibly can see from this proof not solely have been the claims created by Katrina’s devastation substantial, however these people who have been insured have been paid again rapidly and nearly utterly by their insurers. The system labored precisely because it ought to have on this respect.

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Are We Studying from Historical past?

Whereas a lot of those that suffered from Katrina had owners insurance coverage, most of them didn’t have flood insurance coverage. As chances are you’ll or could not know, flood insurance coverage is a separate protection not routinely included on a owners insurance coverage coverage. And whereas many who endured Katrina thought the flood, on account of the hurricane, can be lined beneath the hurricane protection afforded by their owners insurance coverage coverage, these people have been sadly mistaken since floods are solely lined beneath flood insurance coverage insurance policies.

Because of this mistaken pondering and the small variety of flood insurance coverage insurance policies issued earlier than the catastrophe, the NFIP ended up in a deficit because the group tried to provide help to people with out flood insurance coverage protection.

This provides an vital lesson to owners in every single place that injury to their properties on account of a flood following or throughout a hurricane shouldn’t be lined by their owners insurance coverage coverage. However are we absorbing and making use of this lesson?

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The Distinction 5 that Years Make

Though many individuals have heard the horror tales of those that suffered devastating losses on account of hurricane Katrina and who didn’t have flood insurance coverage, it has not made customers within the U.S. extra apt to purchase the protection. Actually, the I.I.I. report reveals that solely 10 % of Individuals presently have flood insurance coverage. That is 3 % fewer than the quantity who had it earlier than Katrina.

Much more worrisome is the continued perception that owners insurance coverage contains flood insurance coverage after a hurricane. Of the folks polled across the U.S. about flood insurance coverage claims, 16 % of them thought the claims can be lined by a owners insurance coverage coverage if the flood was the results of a hurricane. Of these in states with excessive claims after Katrina, 35 % of these polled thought that the flooding introduced on by Katrina can be lined by their owners insurance coverage coverage.

The Significance of Flood Insurance coverage

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A flood is a flood, it doesn’t matter what causes it. Rain coming into your property from a lacking roof shouldn’t be a flood, however a rising physique of water that infiltrates usually dry land is. For the 53% of Individuals who dwell in coastal communities, this distinction is vitally vital.

Many people solely purchase flood insurance coverage when their mortgage firm requires them too as a result of they dwell in a chosen flood zone. But when Katrina taught us something, it is that you just do not need to reside in an official flood zone for a flood to have an effect on you.