Hurricane Ian Could Cost Up to $17 Billion in Uninsured Losses

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  • Hurricanes can cause major destruction when they strike.
  • Not being adequately insured could lead to devastating financial loss.
  • A standard homeowners insurance policy doesn't cover flood damage, so some homeowners may need to purchase extra coverage.

Talk about devastation.

When Hurricane Ian hit Florida in late September, it caused extreme damage that left many homes uninhabitable. But now, in the wake of the storm, property owners impacted by Ian could face as much as $17 billion in losses that aren't covered by their homeowners insurance policies. And the reason largely boils down to not having the right insurance in place.

A world of destruction

Research firm CoreLogic estimates uninsured flood damage from Hurricane Ian at between $10 billion and $17 billion. That's roughly the same amount of insured flood losses related to the storm.

Why such a large cost figure in terms of uninsured damage? It's a matter of homeowners not having the right coverage.

Standard homeowners insurance policies generally cover wind damage as it relates to storms. But flood damage usually is not covered by standard homeowners policies. Rather, property owners are generally required to purchase separate flood insurance policies to get coverage in the event of water damage from a storm.

But only about 13% of homes in Florida have flood insurance, per the Insurance Information Institute. And given the number of hurricanes that have hit the state in the past few decades, that's surprising.

Or is it? Part of the problem is that some people just aren't informed of the need for flood insurance. And while mortgage lenders do, as a matter of course, require borrowers to purchase a homeowners insurance policy to finalize a home loan, they don't typically put a flood insurance requirement in place.

Furthermore, homeowners who buy flood insurance often do so because their properties fall in a flood zone on the FEMA flood map. But not every home that has the potential to sustain flood damage is located in a designated at-risk area by FEMA. And so it's easy to see why so many homeowners go without that coverage -- and then wind up regretting it after the fact.

Is your home properly insured?

Even if your home isn't located in an identified flood zone, it could still pay to look into flood insurance. You might also want to look at hurricane insurance if you live in a place like Florida where major storm events are fairly common.

In some states that are known to experience extreme weather events, insurance companies may actually require you to purchase extra coverage on top of your standard homeowners policy. That's not necessarily a bad thing, though, as it means getting the coverage you need.

The whole purpose of having homeowners insurance is to protect yourself from catastrophic financial losses in the event of damage to your property. But it's important to go the extra mile and make sure you're covered for different types of damage and weather events likely to strike in your area.

Right now, homeowners across Florida are struggling to pick up the pieces in the aftermath of Hurricane Ian. But those with adequate insurance coverage are no doubt faring better than those who are learning the hard way that the damage their homes sustained isn't covered in full or at all.

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