This blog post has been updated based on new information received since it was first published on September 4, 2020.
Hurricane Laura may have caused as little as $4 billion of insured damage or as much as $13 billion, according to early estimates.
Property information, analytics and data provider CoreLogic said residential and commercial insured losses from Hurricane Laura in Louisiana and Texas will come in at between $8 billion and $12 billion. Most of the property damage occurred in southwest Louisiana, where Laura made landfall early as a Category 4 hurricane with 150 mph winds.
Catastrophe risk modeler RMS puts the range between $9 billion and $13 billion. This includes wind and storm surge losses of between $8.5 billion and $12 billion, inland flood losses of $100 million to $400 million, and National Flood Insurance Program (NFIP) losses of $400 million to $600 million.
Catastrophe risk modeling firm Air Worldwide said it expects losses related to Laura to fall in the $4 billion to $8 billion range. The combination of the storm’s track through less-populated areas and its relatively small “Rmax” – the distance from the center of the storm to the location of the maximum winds – should keep insured losses down somewhat, the company said.
Cat risk modeler Karen Clark & Co. estimates insured onshore property losses from wind and storm surge will likely amount to $8.7 billion in the U.S. and $200 million in the Caribbean. Its estimate includes the privately insured wind and storm surge damage to residential, commercial, and industrial properties and automobiles but not losses covered by the NFIP or losses to offshore assets.
All estimates are subject to change as more information becomes available.
Following a major disaster like Hurricane Laura extended power outages are common. Nearly 800,000 customers in Louisiana and Texas were without power after the storm hit. However, most electric utility companies do not offer their customers reimbursement for food spoilage caused by long-term power outages.
In the areas of Louisiana and Texas affected by Hurricane Laura, none of the power companies serving those areas provide such reimbursements, according to Bill Davis of Triple-I .
Insurance companies will usually cover up to $500 of food that spoils from a power outage caused by a covered peril under standard homeowners insurance policies. Homeowners insurance deductibles will apply to food spoilage coverage, however, so a $500 deductible, which most policyholders carry, would mean that the policy would only pay if the policyholder suffered more than $500 in food spoilage losses. Some insurers offer food spoilage coverage with a separate deductible for an additional premium.
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.
Laura made landfall near Cameron, La., as an “extremely dangerous” Category 4 hurricane. The National Hurricane Center (NHC) said in an early-morning bulletin that Laura had weakened to a Category 3 hurricane, with rapid weakening forecast, and the storm has since been downgraded to a Category 1 as it heads northward.
Despite the downgrade,
the hurricane still had sustained winds of more than 100 mph. Heavy rain is
predicted to be widespread across the west-central Gulf Coast, with five to 10
inches falling over a broad area, and locally up to 18 inches, leading to flash
The storm is now tracking inland
across western Louisiana with damaging winds and is an inland flood risk as far
north and east as Arkansas and the Ohio and Tennessee valleys.
“The threat of tornadoes today and
even tomorrow also exists as the storm recurves into the Tennessee
Valley,” Klotzbach said.
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.”
Tropical Storm Laura has been upgraded to a hurricane and is tracking northwest across the Gulf of Mexico. The system is likely to make landfall Wednesday evening or Thursday morning, possibly in eastern Texas or western Louisiana. High winds, heavy rain and storm surge are expected.
If you live along the northern Gulf Coast you are encouraged to prepare now, as conditions will deteriorate during the day on Wednesday.