Superstorm Sandy is now the third costliest storm in U.S. history, the Insurance Information Institute says.
I.I.I. says insurance companies will pay out an estimated $18.8 billion in claims to their policyholders, ranking it behind Hurricane Katrina in 2005 ($48.7 billion in 2012 dollars) and Hurricane Andrew in 1992 ($25.6 billion).
Insurance regulators in New Jersey and New York—the two states hardest-hit by Sandy—report insurers have settled 93 percent of the claims they received in the wake of Superstorm Sandy.
More than half of the 1.5 million claims for Sandy-related damage to homes, vehicles, boats and businesses were filed in either New Jersey or New York. The others were filed in a dozen other states as well as the District of Columbia, I.I.I. says.
The damage caused by Sandy generated nearly 1.1 million claims from homeowners, 250,000 from vehicle owners and more than 200,000 claims from business owners.
Business claims accounted for 13 percent of all those filed after Sandy, yet they will in the end account for 48 percent of the total claims dollars paid for Sandy, adds I.I.I.
The reason is that the value of commercial property is often higher than that of home properties and thus the cost to repair or rebuild is greater, according to Robert Hartwig, president of I.I.I.
In addition, business interruption coverage reimburses a business owner for lost profits and continuing fixed expenses during the time that a business must stay closed because of physical damage to their premises.
Sandy made landfall near Atlantic City, New Jersey, on October 29, 2012, causing fatalities and widespread power outages in addition to significant property damage.
The estimates of claims payments do not include claims for flood damage insured under the federal government’s National Flood Insurance Program.
Officials of the Federal Emergency Management Agency, which administers the flood program, have privately estimated that they will pay out approximately $7 billion in Sandy claims, according to the Mike Cheney, Mississippi insurance commissioner and head of the NAIC Property Casualty Insurance Task Force.
Most of the damage was in New York and New Jersey. Sandy insurance claims were also filed in Connecticut, Delaware, Massachusetts, Maine, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia.
According to agency records, NFIP paid out $16 billion in flood claims for Katrina. Andrew’s cost to the NFIP were far less, $169 million, because it caused mostly wind damage.