Insurers are gathering their resources to ready themselves for what are sure to be colossal claims and cleanup efforts following the damage wrought by Hurricane Sandy.
In the meantime, trade groups have offered a number of auto insurance tips for those impacted by the disaster.
Taking Advantage of Your Auto Insurance
In most weather-related situations, the comprehensive portion of your car insurance policy will cover damages. About 75 percent of policyholders have that optional form of coverage, according to Loretta Worters, a spokeswoman for the Insurance Information Institute (III) who spoke with Online Auto Insurance News.
Comprehensive coverage covers vehicle damage from incidents including vandalism, a tree or light pole falling on your car and your car getting flooded, the latter two being problems that many policyholders are facing following Hurricane Sandy.
Comprehensive coverage may also be useful after Hurricane Sandy because it covers crime-related damage, according to Worters.
“Unfortunately, you may see looting now,” she said. “But being fully covered works in your favor that way; you never know what will happen.”
Many people may have unfortunately dropped this coverage in order to get lower car insurance quotes, though.
Collision coverage might be useful also, Worters said, but is used less frequently in such disasters. The collision part of your policy, also an optional purchase, pays for damages to the insured car when the driver crashes into other cars or objects.
Such situations may have come into play from the recent hurricane whenever a driver skidded on water and struck an object, according to Worters.
Both the III and Property Casualty Insurers Association of America have issued phone directories that policyholders can use to contact insurers about their disaster-related insurance claims and inquiries.
Insurers So Far Unable to Set Up Claims Centers
Typically following disasters, insurance carriers erect call centers and claims collection centers around affected areas to directly help policyholders begin the recovery process. After summertime hailstorms hit Texas, which was one of the costliest hailstorms in the state’s history, insurers flocked to the state to handle the higher volume of claims.
Among the Texas auto insurance carriers behind efforts in the state was Allstate, which brought a “mega drive-in center” to address the influx of claims.
“With technology today, a lot of these centers are basically like fully functional satellite offices,” Worters said.
Such an effort has not yet begun yet with Hurricane Sandy, which has inflicted severe flooding in areas across New York and New Jersey.
“Insurers haven’t been able to get into the areas they need to yet,” Worters said. “There’s a lot of pumping out of water because there are still a lot of electrical safety issues. Once it’s safe enough to go in, insurers will start gathering claims information.”
Damage Estimates Vary
Damage estimates from Hurricane Sandy are wide-ranging, although the III has not compiled its own loss estimates yet.
“There’s amounts thrown all over the spectrum in the news,” Worters said.
The New York Times estimates that insurers will be on the tab for $5 billion to $10 billion in property and casualty claims. Time Magazine reported IHB Global Insight’s estimate of about $60 billion in total losses, with $20 billion in property damages and between $10 billion and $30 billion in “lost business.”
Worters backed the estimate from the New York Times, saying that “insurance modelers are getting numbers in the $5 billion to $10 billion range.”
“Again, it’s too early to tell, and we won’t know until we actually get in there,” she said.
The III has provided rankings for the most costly hurricanes in history to put Sandy in perspective:
–In 2005, Hurricane Katrina left $47 billion in insured losses.
–In 1992, Hurricane Andrew left $23 billion in insured losses.
–In 2008, Hurricane Ike left $13 billion in insured losses.
–In 2005, Hurricane Wilma left $12 billion in insured losses.
Worters said that last year’s Hurricane Irene left about $4.3 billion in insured losses, with $1.3 billion of that from flood losses. The III expects damage from Hurricane Sandy to “be at least that amount and likely significantly more, but how much more we don’t know yet.”
In the first half of this year, insurers have incurred 43 percent lower costs related to catastrophes than the same period last year, according to Worters.
“This has been a relatively mild year for disasters until now,” she said. “In general, despite the potential enormous loss here from Sandy, insurers remain strong.”
Disaster Forces Shuttering of III Offices in Downtown NYC
The III offices are located in downtown New York City near the World Trade Center site on Williams Street.
Worters said much of the area has been reportedly flooded, although she said she did not know if the III offices had been flooded specifically.
“I’ve heard that there’s a lot of damage down there,” said Worters, who added that III staff are working remotely until they are cleared to return to the offices. Worters also said that, as of press time, bus service had been partially restored to the city and there were reports of subway service returning soon afterwards.