U.S. insurers hit by Floyd

Franklin, Virginia under six feet of Hurricane Floyd flood water. Photo by Liz Roll/ FEMA News Photo.|Pactolus, North Carolina after the af- fects of Hurricane Floyd. Photo by Dave Gatley/FEMA News.

U.S. property and casualty insurers will pay homeowners and businesses an estimated $1.3 billion for insured property damage caused by Hurricane Floyd, according to preliminary calculations by the Insurance Services Office Inc.

Hurricane Floyd hit 16 states, from Florida to Maine, but insured property damage was not as devastating as initially feared. North Carolina was the hardest hit, according to the ISO, with an estimated $835 million in losses to be paid out in the state. More than 503,000 claims are expected to be filed with insurers. Estimates indicate North Carolina homeowners and businesses will file 230,000 insured property-loss claims with insurers.

The hurricane made its landfall near Cape Fear, North Carolina, on September 15 as a strong Category 2 hurricane and then was downgraded to a tropical storm the following day. Much of the property damage was from widespread flooding from heavy rainfall, not from powerful winds. The U.S. federal government covers flood losses through its National Flood Insurance Program, and those losses are not included in the ISO estimates.

If preliminary reports are correct, Hurricane Floyd will tie 1970’s Hurricane Cecilia as the ninth costliest hurricane in U.S. history.

Canada’s East Coast experienced its own share of flooding the week of September 20th and have been contacting agents, brokers or insurers to report damage caused to their homes and businesses.

“Preliminary estimates indicate that many residents had some type of sewer backup or water escape coverage,” says Don Forgeron, vice president of the Atlantic region with the Insurance Bureau of Canada. Homeowners have been cautioned by IBC that damage caused by sewer or sump backup is often covered, but not if the damage is caused by water from underground streams, rising of the water table, overflow of rivers or lakes, or rain water outside of the home which seeps in through basement walls or comes through doors or windows. IBC sources say insurer costs stemming from the incident will be released shortly.