As Hurricane Milton, a Category 5 storm, approaches Florida, residents are not only preparing for the immediate impact but also grappling with a looming insurance crisis. The devastation from Hurricane Helene, a Category 4 storm that struck on September 26, has left many in western North Carolina and other southeastern states struggling to rebuild without adequate insurance coverage.
The financial toll from Helene is staggering, with property damages estimated between $30.5 billion and $47.5 billion. Shockingly, uninsured flood losses range from $20 billion to $30 billion, according to CoreLogic, a leading data analytics firm.
One of the root causes of this issue is the lack of comprehensive insurance coverage. Standard homeowners' insurance policies typically exclude flood damage, necessitating separate policies or enrollment in the National Flood Insurance Program (NFIP). However, as of May 2023, a Congressional Budget Office study revealed that 92 percent of U.S. properties at risk of flooding are not covered by the NFIP.
This insurance gap is projected to widen as the effects of climate change intensify. The year 2023 alone saw multiple weather and climate records shattered, including July’s warmest temperatures in the 174-year history of the National Oceanic and Atmospheric Administration. Since 1980, weather and climate-related disasters have cumulatively caused an estimated $2.6 trillion in losses.
Insurance companies are responding to the increased demand for coverage by raising premiums, further exacerbating the problem. Charles Nyce, a professor of risk management and insurance at Florida State University’s College of Business, explained to Salon that higher premiums are necessary to ensure insurers remain solvent and can pay future claims. However, this trend disproportionately affects less affluent individuals, who are least able to bear the additional costs.
As multiple hurricanes continue to threaten the U.S., the urgent need for comprehensive insurance solutions becomes increasingly clear. Addressing this insurance gap is essential to protect homeowners and communities from the escalating financial impacts of natural disasters.
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Multiple hurricanes raise grave concerns about U.S. insurance gap
cgtn.com
