Hurricane losses ranked

Newly released insurance industry information has ranked all four of this season's hurricanes among the top ten costliest U.S. hurricanes in the past 25 years.

BY SUSAN KIM | BALTIMORE | November 19, 2004

Newly released insurance industry information has ranked all four of this season's hurricanes among the top ten costliest U.S. hurricanes in the past 25 years.

And, taken together, the cost of this seasonís storms edges out the cost of Andrew by about $100 million.

A report by the Insurance Information Institute (III) shows Hurricane Charley was the second costliest hurricane, with some $6.7 billion in insured losses. That's a far second to Andrew, which caused about $20.3 billion in losses in 1992.

Hurricane Ivan ranked fourth, with $6 billion in losses, coming just under Hugo's costs of $6.2 billion.

Hurricane Frances came in fifth with insured losses of $4.4 billion, while Jeanne ranked seventh with $3.24 billion. Hurricane Georges - which caused $3.27 billion in damages - barely notched in above Jeanne.

Finally, eighth, ninth and tenth rankings: Hurricane Opal in 1995 with $2.5 billion, Floyd in 1999 with $2.1 billion, and Iniki in 1992 with $2.09 billlion, respectively.

These estimates are for insured losses only, and are in addition to the extensive financial assistance provided by the Federal Emergency Management Agency and other federal agencies.

The rankings also did not include an estimated $1.2 billion in insurance payments by the Florida state-created insurer of last resort, the Citizens Property Insurance Corporation (CPIC). The CPIC was created by the state about two years ago to provide insurance coverage for homeowners and businesses that could not obtain insurance elsewhere.

The CPIC currently has reserves totaling $1.5 billion. If the CPIC were to use all available funds for payments, it can assess a special charge on all Florida property insurers, which those companies can in turn pass on to their policyholders.

The CPIC is continuing to process insurance claims, and will not have final insurance payment totals until late February 2005.

Mold damage may not be covered

As high as insured losses may appear, one type of damage may not be covered under most homeowner's policies: mold.

According to the III, from the insurance perspective, damage from mold - and rust, rot and mildew - is specifically excluded in the standard homeowners policy.

Mold contamination is covered under the homeowners policy only if it is the result of what insurers call a "covered peril:" for example, the costs of cleaning up mold caused by water from a burst pipe are covered under the policy because water damage from a burst pipe is considered a "covered peril."

But, in the eyes of an insurer, mold caused by water from excessive humidity, leaks, condensation or flooding is a maintenance issue for the property owner - comparable to termite or mildew prevention - and is not covered by the policy.

The number of mold claims submitted to home insurers has increased significantly during the past year, according to the III. Insurance representatives have stated that, if insurers are now going to be asked to pay claims for something that is not covered in the policy, the price of home insurance will inevitably rise.

Changes are likely when it comes to mold-related coverage. Some companies may decide to cover all mold claims and price the policy accordingly, said III. Others may exclude mold, but offer an attachment to the policy - called an endorsement - that allows you to add the coverage. Still other companies may provide a tighter definition of what is and what is not covered. Still others may end up creating an absolute exclusion.

There are 1,000 species of mold that are common in the United States, according to the Centers for Disease Control (CDC). Common health concerns from molds include hay fever-like allergic symptoms, according to the CDC. People with chronic respiratory disease may experience difficulty breathing. Individuals with immune suppression may be at increased risk for infection from molds.

Basic questions to ask about insurance

Insurance is a complex industry but the III offers three basic questions that homeowners should ask about insurance:

1. Do I have enough insurance to rebuild my home?

To accomplish this goal, you need to cover the cost of rebuilding your home at current construction costs. Unfortunately, some homeowners simply purchase enough insurance protection to satisfy their mortgage lender. Others confuse the real estate value of their home with what it costs to rebuild it. Quite simply, you need to have enough insurance to rebuild your home in the event that it is completely destroyed.

2. Do I have enough insurance to replace all of my possessions?

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50% to 70% of the amount of insurance you have on the structure of your home. This means that if you have $100,000 worth of coverage on the structure of your home, you would be covered for $50,000 to $70,000 worth of personal items.

To determine if this is enough coverage, conduct a home inventory. This is a detailed list of everything you own and the estimated cost to replace these items if they are stolen or destroyed by a disaster.

You can insure your possessions in two ways. You can either insure your belongings for their actual cash value or their replacement cost.

3. Do I have enough insurance to protect my assets?

Homeowners insurance includes liability protection. This covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by pets. It pays for both the cost of defending you in court and for any damages a court rules you must pay - up to the limits of your policy. Generally, most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. It is important to purchase enough liability insurance to protect your assets.

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