A week after Hurricane Gustav pummeled the Louisiana Gulf Coast, insurance companies are beginning to tally up the cost.Â Â It has been estimated that Hurricane Gustav insurance claims could reach $10 billion.
Hurricane Gustav came ashore the Louisiana Gulf Coast on Monday. Unlike Katrina, levees in New Orleans and some surrounding communities held – although in some case just barely – sparing the area the catastrophic flooding that was seen in 2005. Â
Forecasters had feared that Gustav could come ashore as a catastrophic Category 4 storm, but the storm weakened to a Category 2 storm by the time it reached land. Damage from the stormâ€™s winds and storm surge spanned from the Gulf Coast of Mississippi to Texas. Even after it weakened to a tropical storm, heavy rains and possible tornadoes spawned by Gustavâ€™s heavy rains caused additional damage.
As of September 7, State Farm said had contacted around 75% of its customers in the hurricane zone, and had received 32,707 property claims relating to Hurricane Gustav.Â Around 1,500 of those claims have been classified as uninhabitable. State Farm said it had also taken more than 4,150 automobile claims.
Farmers Insurance Group said that as of midday Sept. 8, more than 9,930 total claims have come in.
The state-run insurer of last resort, Louisiana Citizens Property Insurance Corp., had received 6,000 claims as of last Friday afternoon. However, that number was expected to grow as evacuated residents return home.
National Security Group Inc.Â said in a statement that its subsidiaries, National Security Fire and Casualty Co. and Omega One Insurance Co., incurred insured losses estimated to be in the range of $3.3 million to $6.7 million.
Hopefully, victims of Hurricane Gustav will have an easier time with their insurance claims than was experienced following Katrina. Faced with staggering losses, insurers used many tactics to avoid paying Katrina damage claims. The fact that so much flooding occurred during Katrina aided the companies in their efforts. One of the major tactics that insurance companies used in Katrina was to find that property damage was caused by flooding, and not by wind. Conventional property insurance does not cover flood damage.