Analysts are now reporting that Hurricane Irene will most likely prove to be one of the ten costliest catastrophes in the nation’s history, AND said that much of the damage might not be covered by insurance. How is that you say?!?! It turns out that much of the damage was caused not by winds but by flooding, which is excluded from many standard policies.
Industry estimates put the cost of the storm at $7 billion to $10 billion, largely because the hurricane pummeled an unusually wide area of the East Coast. Beyond deadly flooding that caused havoc in upstate New York and Vermont, the hurricane flooded cotton and tobacco crops in North Carolina, temporarily halted shellfish harvesting in Chesapeake Bay, sapped power and kept commuters from their jobs in the New York metropolitan area and pushed tourists off Atlantic beaches in the peak of summer.
According to an analysis by the Kinetic Analysis Corporation, insurers have typically covered about half of the total losses in past storms, however they might end up covering less than 40 percent of the costs associated with Hurricane Irene. So much damage was caused by flooding, and it is unclear how many damaged homes have flood insurance, and partly because deductibles have risen steeply in coastal areas in recent years, requiring some homeowners to cover $4,000 worth of damages or more before insurers pick up the loss.
So who will end up paying for this loss? The governors of New York, New Jersey and Connecticut sought expedited disaster declarations from the federal government on Tuesday, which would pave the way for more federal aid and federal disaster payments.
In Vermont, roads are washed away, as were 35 bridges, including at least four historic covered bridges. Four railroad bridges in the state are also impassable, and Amtrak has announced that it has suspended train service indefinitely on its Vermont routes.
Worried that the reports of the devastation could put off visitors as Vermont enters one of its prime tourist seasons, leafers as they are called, — autumn always attracts legions of leaf peepers who come to gawk at foliage — the Vermont Chamber of Commerce turned to Facebook and opened a FB page, VisitVT, in which local inns and other businesses could leave posts explaining whether they are open and whether they were damaged.
Exactly how much economic activity was lost to the storm is difficult to say. Airports were closed, Broadway theaters stayed dark, ballgames were called, commuters could not get to the office, businesses lost power, and big plants were flooded. And how much economic activity will be generated by the cleanup and rebuilding efforts is hard to pinpoint. But economists are beginning to make educated guesses and it will be a VERY large number.