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Hurricane Katrina Insurance Facts

Check out the Hurricane Katrina facts below and see how homeowners insurance rates were affected as a result. Be sure that you have adequate hurricane insurance coverage on your home AND make sure that you aren’t paying more than you should. Enter your zip code in the free quote box above and compare insurance quotes online!

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Hurricane Katrina Insurance Facts

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Got Coverage? A Look at Insurance Coverage Post Hurricane Katrina

Hurricane Katrina was one of the most devastating storms ever to hit the US. It caused billions of dollars in damages and insurance losses and almost 2,000 deaths in 5 states. The city of New Orleans was forever changed by the disaster and will never be the same. The hit HBO series Treme recently won critical acclaim by highlighting the plights of normal people as they struggled to rebuild in the wake of the storm.

The impact of Hurricane Katrina served to highlight just how the government, insurance companies, and the people of disaster-affected areas respond to natural disasters. The Hurricane Katrina timeline graphic above gives you a peek inside the Hurricane Katrina aftermath, as well as just how much Katrina impacted insurance companies and the need for proper coverage.

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If you are wondering when was Hurricane Katrina or when did Hurricane Katrina first hit or you simply want to view some Hurricane Katrina statistics or Hurricane Katrina pictures then continue reading and let this serve as a warning to you about how powerful hurricanes can be.

The Path of Hurricane Katrina Damage

Florida: The storm swings by the extreme southern end of Florida as a Category 1 hurricane (the “weakest” level of hurricane). It exits via Florida’s west coast into the Gulf of Mexico. 14 people die to begin the Hurricane Katrina death toll.

Louisiana: The storm quickly gains strength in the Gulf of Mexico, spiking rapidly, but then falling to category 3 before making landfall in Louisiana. The massive wind surge caused by the storm leads to blown levees. 80% of the city is flooded, and will remain flooded for days or weeks. 1577 people die.

Mississippi: The storm continues up into Mississippi, slowly losing power, but continuing to swell coastal waters. This causes severe damage for towns and cities along the river. 238 people die.

Other related Hurricane Katrina deaths:

Alabama: 2

Georgia: 2

Total number of Hurricane Katrina evacuees: 1.2 million

Hurricane Katrina Damage Numbers

Total damage caused: $81 billion

Insured losses: $40.6 billion

Hurricanes & Home Insurance Gray Area

In the wake of huge disasters like this, insurance companies often try to ease the suffering of those affected by making the claims process as smooth and permissive as possible. However, there are times when, no matter how much the insurance company would like to pay out to the customer, the way the damage was inflicted makes that difficult or impossible. In one case study, a homeowner named “Donald” had a private insurance plan and federal flood insurance.

The private insurance plan covered damage from rain and wind, but not from flooding. The federal flood insurance covered damage from flooding, but not from wind and rain. The problem with Hurricane Katrina was that in New Orleans there was rain, wind, and flood damage, all caused by the hurricane. Without the storm surge caused by the hurricane, the levees would not have burst, leading to flood damage. Therefore, the flood damage was attributable to Hurricane Katrina. The wind and rain damage was directly caused by Hurricane Katrina, of course.

Donald’s problem was this: the flooding resulted in five feet of water flooding his house. His federal flood insurance paid out $250,000, which is the full amount. His private insurance, with a total value of $200,000, only paid him $900 for damage on the second story of the house, which could have only been caused by wind and rain (which should have been covered by the private insurance plan). The insurance company’s claim: it was all flood damage.

Outcomes for the Insurance Industry Post-Katrina

Insurance industry profits, nationwide, in the nine months following Katrina:

  • Income: $28.8 billion (4% increase in profits)
  • Surplus: $20.4 billion
  • New Capital: $6.3 billion

The federal government estimates that Louisiana families received $5,700 less than they should have from insurance companies. This led to an extra $900 million in losses for 160,000 families.

Changes in Insurance Premiums Post-Katrina

Collen owns a house in central New Orleans. A case study of her insurance premiums before and after Hurricane Katrina showed the following:

  • Before Katrina: $2,000
  • After Katrina: $7,800
  • 2009, new coverage available: $3,500
  • Total annual insurance charges (including increases in federal flood insurance charges): $5,000+

Other Economic Impacts of Hurricane Katrina

Insurance industry losses combined with losses in other sectors resulted in a total loss of $150 billion dollars between Louisiana and Mississippi. This represents an 82% decline in production for the two states. One sector that was particularly hard hit was the timber industry. The physical destruction caused by the storm destroyed 1.3 million acres of trees. This translated to a $5 billion loss for the timber industry.

10 Most Costly Natural Disasters in American History

While Hurricane Katrina remains firmly atop the list with almost $46 billion in damages and destruction, other storms and natural disasters have also wreaked havoc on the American people. Here are the top ten most expensive disasters in history:

1. Hurricane Katrina, 2005: $45.9 billion
2. Hurricane Andrew, 1992: $24.1 billion
3. California Earthquake, 1994: $18.4 billion
4. Hurricane Ike, 2003: $12.7 billion
5. Hurricane Wilma, 2005: $11.5 billion
6. Hurricane Charlie, 2004: $8.6 billion
7. Ivan, 2004: $8.2 billion
8. Hurricane Hugo, 1989: $7.4 billion
9. Hurricane Rita, 2005: $6.3 billion
10. Midwest Flooding, 1993: $5.4 billion

It’s worth noting that while no single tornado has ever been as costly as the disasters listed here, scientists estimate that 2011 could see some of the most powerful tornadoes ever recorded.

Finding Cheap Hurricane Insurance Coverage

To find the best hurricane insurance coverage then be sure to compare all of your option and enter your zip below for free insurance quotes!

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