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Report: Historically damaging hurricanes would be much more costly today

Posted On Fri, August 24, 2012

A new report released by Karen Clark & Company (KCC) states that several historical U.S. hurricanes would have cost more than $10 billion in insured losses had they occurred in 2012.

The data used in the report was based on the nearly 180 hurricanes that have hit the United States since 1900. KCC judged potential insured losses based on the increased number, size and cost of the structures in the storms' paths.

The most expensive hurricane, according to the report, was the 1926 Great Miami Hurricane, which today would have created insured losses of $125 billion.  At the time, the hurricane caused damages that amounted to about $100 million, or $1.3 billion in 2012 dollars. But with the increase in Miami's population and construction costs, the toll today would be much higher.

According to the report, U.S. insurance providers should expect at least one $10 billion dollar hurricane every four years.

This high probability, combined with the dangerous flood-zone locations of most homes in hurricane areas, drives up the cost of hurricane insurance rates. The deductibles, which are available as an addition to most homeowner's insurance policies, cost between 3 and 5 percent of the damages that would need to be paid on a property.

Hurricane deductibles do not protect against water damage, however. Homeowners looking to protect their property from floods need to purchase flood insurance, which is separate from homeowners insurance policies altogether.

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