Category Archives: Catastrophes

Ordered to evacuate due to Hurricane Laura? You might have insurance coverage for additional living expenses

Loretta Worters, Vice President Media Relations, Triple-I

People who evacuated their residence due to Hurricane Laura may have coverage for additional living expenses under either their homeowners or renters insurance policies.

Additional living expenses (ALE), also known as Loss of Use, pays the additional costs of living away from home if you cannot live there due to mandatory evacuation or as a result of damage to your home from an insured catastrophe, such as a hurricane. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses.  It can also include storage fees, mileage if you have to drive farther to work, pet boarding and laundry.  Even utilities that are more expensive in your temporary home may be included.  Also remember you are entitled to stay in a place that’s comparable in size and quality to your house.

Keep in mind that the ALE coverage in your homeowners policy has limits—either a percentage of your dwelling coverage – typically 20 percent,  or a time limit, usually 12 months. If you rent out part of your house, ALE also covers you for the rent that you would have collected from your tenant if your home had not been destroyed. This is sometimes insured on an actual-loss-sustained basis (what the homeowner would have earned had the loss not occurred).

Consumers who have chosen to go to a hotel because their power is out, won’t be eligible for ALE reimbursement.  ALE is only triggered through a mandatory evacuation or if the property is considered uninhabitable.  If you left because of a mandatory evacuation order but stayed away because the power was out, you may only be eligible to claim expenses for the time until the evacuation order was lifted. 

Standard home insurance also doesn’t cover ALE as a result of flood damage. The National Flood Insurance Program doesn’t include additional living expenses either, although there are some privately sold flood policies that do. Consult your insurance policy or contact your insurance professional for details.

Hurricane Laura set to develop into Cat 4 storm

The National Hurricane Center forecasts Hurricane Laura to reach Category 4 intensity later today.  A ‘life-threatening’ storm surge of 10 to 15 feet is predicted, one of the worst in years, along with destructive winds. The storm is poised to strike the upper Texas coast and western Louisiana.  Hurricane and storm surge warnings have been issued for much of this zone.

If you live in an area ordered to evacuate, leave now. Do not attempt to ride out the storm.  Take your insurance contact information and home inventory with you.

In an analysis based on the assumption that Hurricane Laura would come ashore on the Louisiana coast as a Category 3 storm, CoreLogic, a catastrophe modeling firm, warns that nearly 432,000 single-family and multi-family homes along the coasts of Texas and Louisiana could be damaged from storm surge. According to the analysis, Laura threatens approximately 431,810 homes with a combined reconstruction value of approximately $88.63 billion.

Said Tom Larsen, principal, insurance solutions at CoreLogic, “The coincidence of two catastrophes—a damaging hurricane season and the ongoing global pandemic—underscores the importance of the correct valuation of reconstruction cost, one of the core tenets of property insurance.”

Atypical Wildfire Activity? Of Course — It’s 2020

If you need any further evidence of the anomalous nature of the year 2020, you can take a look at California’s wildfires. Two of the three largest fires in California history rage across the state, alongside about 600 others, burning more than 1.3 million acres — an area about the size of Delaware — and forcing more than 100,000 people to evacuate.

Those of us who aren’t directly affected may have become jaded enough to think, “More fires in the West. That’s normal.”

But as Janet Ruiz, Triple-I’s California-based director of strategic communications, explains, “We’ve had a significant number of large wildfires since 2015, but this year is anything but normal.”

Your first clue might be the alphabet soup of names applied to this year’s blazes: LNU, CZU, SCU. You might remember Northern California’s major wildfires in recent years — the Camp Fire, the Carr Fire, Tubbs, Ferguson — and wonder why this year’s don’t have similarly straightforward names.

According to California fire officials, it’s because the number of fires has required them to be grouped together in “complexes”:

  • The LNU Lightning Complex in the northeast Bay Area, including Sonoma, Napa, Solano, and Lake counties.
  • The CZU Lightning Complex in the western and southern Bay Area, including San Mateo and Santa Cruz counties.
  • The SCU Lightning Complex in the eastern and southeastern Bay Area, including Santa Clara, Alameda and Contra Costa counties, and neighboring San Joaquin and Stanislaus counties.

“We only group fires like that when we have a lightning siege as such,” Brice Bennet, a public information officer for the California Department of Forestry and Fire Protection (Cal Fire), told the San Francisco Chronicle.

The last major lightning siege was in 2008.

“Once the fires are grouped into a complex,” the Chronicle explains, “they’re managed so fire managers can assess all the different fires within each one and share resources across the greatest need — life being first, and property second. That’s where the prefixes come in. Those monikers are geographical locators based on Cal Fire administrative unit codes.”

Ruiz explained that many of the fires since 2015 were caused by human activity, rather than nature.

“Authorities have worked hard and invested a lot of money to mitigate those causes,” she said. “Then along comes this unpredictable, unpreventable abundance of lightning strikes.”

Fewer firefighters: Thanks, COVID-19

The daunting number of blazes coincides with a reduced availability of firefighters, courtesy of the coronavirus pandemic.

“In past seasons, a lot of help came from inmates recruited to assist in firefighting,” Ruiz said. “Many of these have been released because of COVID-19 and therefore aren’t available.”

Less warning, preparation paramount

Lightning is a universal metaphor for random ill fortune, and the chaotic causation of California’s 2020 fires has affected how authorities communicate with residents about impending threats.

“Normally you’d get warnings about approaching fires, followed, if necessary, by a mandatory evacuation order,” Ruiz said. But last week, when Ruiz was evacuated, “We didn’t get an advisory – we were just told to go.”

Wisely, she and her husband keep “to go” bags near their front door and were able to leave within 10 minutes of receiving the order.

A year characterized by a global pandemic, historic civil unrest, an “extremely active” hurricane season, a destructive derecho – not to mention the more bizarre entomological offerings of murder hornets, zombie cicadas, and invasive “jumping” earthworms – is no time to forgo caution where wildfire safety is concerned.

Ruiz reminds us that this fire season is still young, and more and worse may be in store.

Further Reading:

Safeguard Your Business From Wildfires: Allianz and Triple-I Team Up on Mitigation

Wildfires and Insurance: Learn How to Prepare Financially

Facts and Stats: Wildfire

Are You Financially Prepared for a Wildfire?

Knowing Insurance Is Part of Wildfire Preparedness

Fighting Wildfires With Innovation

I.I.I. Media Tour: What You Need to Know and Do
as Hurricane Season Peaks

The Insurance Information Institute (Triple-I), along with Colorado State University’s atmospheric research scientist Dr. Phil Klotzbach, will be conducting a satellite media tour on Tuesday, August 11, to talk about what may lie ahead for the remainder of the hurricane season.

Dr. Phil Klotzbach, Colorado State University

We will be talking with news organizations throughout the U.S. about the steps individuals and businesses in hurricane-prone states need to take to protect their property and possessions with the right type—and amount—of insurance.

The following subject-matter experts will be available for interviews:

  • Sean Kevelighan, CEO, Insurance Information Institute (Triple-I)
  • Dr. Phil Klotzbach, Research Scientist, Colorado State University and a Triple-I Non-Resident Scholar
  • Laura L. Favinger, Chief Administrative Officer, Triple-I
  • Mark Friedlander, Director, Corporate Communications, Triple-I

Damage caused by tropical storms and hurricanes can upend lives for months, and sometimes years. Even in the country’s most vulnerable coastal states, individuals and businesses may underestimate their risk or have insufficient insurance coverage, operating without either an evacuation or a business continuity plan.

As the peak of 2020’s already busy Atlantic hurricane season approaches, it’s time to make sure you’re ready.

Nearly 20 media outlets have signed up to participate, and the following stations will be broadcasting live interviews (times are Eastern Standard):

08-11-2020 08:35 am – 08:45 am ET: WRAZ-FOX TV Raleigh-Durham (27) “WRAL’s 8am News on Fox50” Live
08-11-2020 09:20 am – 09:30 am ET: WPBF-ABC TV West Palm Beach-Ft. Pierce (36) “WPBF 9AM NEWS” Live
08-11-2020 09:40 am – 09:50 am ET: WBRC-FOX TV Birmingham (Ann and Tusc) (44) “Good Day Alabama” Live
08-11-2020 10:20 am – 10:30 am ET: WTKR-CBS TV Norfolk-Portsmth-Newpt Nws (42) “Coast Live ” Live

If you’d like to arrange an interview with our experts, please contact MultiVu Media Relations, 800.653.5313 x3

Insured Losses
Due to Civil Unrest
Seen Nearing 1992 Levels

Insured losses related to civil disorder in 2020 are on their way toward a level not seen since 1992, according to estimates by insurance industry analysts. 

On May 26, 2020, protests and riots broke out in response to the death of George Floyd while in Minneapolis police custody and spread to another 140 U.S. cities. By June 4, at least 40 cities in 23 states had imposed curfews, and rioting resulted in at least six deaths. National Guard were called in at least 21 states and Washington, D.C. 

Property Claim Services (PCS) a unit of a Verisk Analytics, has designated the Minneapolis riots a catastrophe. This was the first time PCS has compiled insured losses for a civil disorder event since the Baltimore riots of April 2015. Insured losses in the Baltimore unrest – following the funeral for Freddie Gray, a 25-year-old who died in police custody – fell short of $25 million when it occurred, PCS’s threshold for a catastrophe.  

The 2020 activity, spanning May 26 through June 8 and including more than 20 states with significant losses, is the first time since 1992 that PCS has declared a civil disorder event a catastrophe. The 1992 riots in Los Angeles, after a jury acquitted Los Angeles Police Department officers for using excessive force in the arrest and beating of Rodney King, caused $775 million in insured losses, according to PCS – or about $1.4 billion in 2020 dollars. 

Insured losses for the most recent event are not yet available from PCS. Preliminary estimates from industry analysts put the losses in the range of $500 million to $900 million.

Those estimates will likely change as insurers are resurveyed and data is refined. 

With protests and clashes with police continuing in Portland, Ore., and elsewhere, and President Trump threatening to send federal troops to quell the disorder in some cities, no end seems to be in sight for this costly string of civil disturbances.  

Hurricane Michael insured losses reach $7.4 billion

Insured losses associated with 2018’s Hurricane Michael reached almost $7.44 billion, according to a recent Florida Office of Insurance Regulation (FOIR) update. The losses consist of residential and commercial property, private flood and business interruption insurance, and miscellaneous coverages. There were 149,773 claims made, and 89 percent of them were closed.

Hurricane Michael became a Category 5 storm on October 10, 2018, and made landfall near Mexico Beach, Florida, in the Florida Panhandle. It was the strongest hurricane to ever hit the Florida Panhandle and the second known Category 5 landfall on the northern Gulf Coast, according to the National Oceanic and Atmospheric Administration. It was the first Category 5 storm to make landfall in the United States since Hurricane Andrew in 1992.

An Artemis analysis of the FOIR report says that based on the run-rate of costs per claim (around $65,890 per claim), another $1 billion could be added to the total before every claim is closed down and that many of the claims remaining open will be among the more costly. Fewer than 69 percent of commercial property claims are closed, compared to almost 89 percent of residential. Business interruption claims are also slow to close and therefore are likely to increase the total.

 

Wildfire evacuation: What to take?

Two wildfires in California are spreading today (Oct. 27), fanned by high winds overnight, forcing tens of thousands to evacuate.

If you are forced to evacuate, here is a list of what to take, culled from a III article on evacuation planning:

  • Prescriptions and other medicines
  • First aid kit
  • Bottled water
  • Flashlight, battery-powered radio and extra batteries
  • Clothing and bedding (sleeping bags, pillows)
  • Special equipment for infants or elderly or disabled family members
  • “Comfort items,” such as special toys for children
  • Computer hard drive and laptop
  • Cherished photographs
  • Pet food and other items for pets (litter boxes, leashes)

From the same article, here is a list of key documents:

  • Prescriptions
  • Birth and marriage certificates
  • Passports
  • Drivers license or personal identification
  • Social Security cards
  • Insurance policies — homeowners, auto, life and any others
  • Recent tax returns
  • Employment information
  • Wills and deeds
  • Stocks, bonds and other negotiable certificates
  • Financial information such as bank, savings and retirement account numbers and recent tax returns
  • Home inventory

Unfortunately, though, if you are told to evacuate it will be too late to search the house for all this stuff. When authorities tell you to leave you must leave immediately. The fire could be on you in moments.

Intent and ability distinguish cyberrisk from natural perils

Cyberrisk is often compared with natural catastrophe-related threats, but a recent study by global reinsurer Guy Carpenter and analytics firm CyberCube suggests a better analogy is with terrorism.

“Probability is assessed in terms of intent and capability.”

The report – Looking Beyond the Clouds: A U.S. Cyber Insurance Industry Catastrophe Loss Study – quotes Andrew Kwon, lead cyber actuary for Zurich: “Extending the lessons learned from property cats to the cyber space is intuitive and logical, but cyber continues to be a unique force unto itself. A hurricane does not evolve to bypass defenses; an earthquake does not optimize itself for maximum damage.”

This passage resonated as I read it because a few hours earlier I’d been reading a FreightWaves article about risks posed to international shipping by digitalization and pondering the fact that the same technology that helps vessels anticipate and avoid adverse weather also subjects them – and the goods they transport – to a panoply of new risks.

The FreightWaves article quotes U.S. Navy Captain John M. Sanford – who now leads the U.S. Maritime Security Department within the National Maritime Intelligence Integration Office – describing how the NotPetya virus inflicted $10 billion of economic damage across the U.S. and Europe and hobbled company after company, including shipping giant Maersk, in 2017.

Sanford said Russian military intelligence was behind the hacker group that spread NotPetya to damage Ukraine’s economy. The virus raced beyond Ukraine to machines around the world, crippling companies and, according to an article in Wired, inflicting nine-figure costs where it struck.

“Maersk wasn’t a target,” Sanford said. “Just a bystander in a conflict between Ukraine and Russia.”

Collateral damage.

The FreightWaves article describes how supply chains, ports, and ships could be disrupted more intentionally through GPS and Electronic Chart Display and Information System (ECDIS) systems onboard ships, or even via a WiFi-connected printer: “Pirates working with hackers could potentially access a ship’s bridge controls remotely, take control of the rudder, and steer it toward a chosen location, avoiding the expense and danger of attacking a vessel on the high seas.”

The Carpenter/CyberCube report identifies parallels in the deployment of “kill chain” methodologies in both conventional and cyber terrorism: “Considering terrorism risk in terms of probability and consequence, probability is assessed in terms of intent and capability.”

As our work and personal lives become increasingly interconnected through e-commerce and smart thermostats and we look forward to self-driving cars and refrigerators that tell us when the milk is turning sour, these considerations might well give us pause.

Hurricanes, earthquakes, fires, and floods might be scary, but at least we never had to worry that they were out to get us.

 

The evacuation dilemma: stay or go?

As of Saturday evening, Hurricane Dorian is making a big right hand turn, moving the storm’s threat north.
So now it seems Georgians and South Carolinians are facing the evacuation dilemma: stay or go?
I’ve been there. In 1992, Hurricane Andrew was heading arrow straight for the border between Broward and Miami-Dade counties. We lived a mile north of that.
We boarded the house up as best we could, moved our valuable stuff (a lamppost, a stereo, a rocker we bought on our honeymoon) into the downstairs bathroom, where it would be best protected. And we sat on our couch and cried. We knew what we owned was junk, but it was our junk. It was everything we had, and we knew we would never see it again.
Then we left.
Too many people take the chance and stay behind. Travelers Insurance surveyed people living in hurricane-prone states. The survey found:

  • Men (23%) were more likely than women (11%) to ignore a mandatory evacuation order.
  • Millennials (21%) were more likely to ignore an order than Gen Xers (16%) or Baby Boomers (11%).
  • People in the most cane-prone states (Florida, Louisiana, Texas’ Gulf Coast) were the stubbornest. Georgians, Alabamians, Mississippians, Virginians and North Carolinians were most likely to heed the order.

Back in 1992, my wife and I were lucky. Hurricane Andrew drifted south, and we returned to a home intact.

Even so, we made the right decision, and I’d urge anyone in the same position now to leave. After all, insurance can help you recover the stuff you’ve lost. But no one can replace you.

I.I.I. has some tips for what to do when a hurricane threatens.

Earthquakes: More links from Insurance Information Instititute

We posted this look at insurance coverage and earthquakes earlier today. More important links about earthquakes and insurance: