Damages Caused by Sandy Estimated at $71B

hurricane sandy imageThe fallout from Superstorm Sandy has no doubt been financially, structurally, physically, and spiritually expensive.  An MSN article estimates the total in damages and loss from Sandy to be at least $71.3 billion for New York state and New Jersey alone.

The preliminary price tag includes restoration for damaged housing, parks, utilities and infrastructure, transit systems, businesses, lost revenue, aid from federal agencies, and measures to mitigate potential damage from future extreme weather.

Official’s caution that the preliminary numbers could rise as assessment of the storm’s impact continues.

So far, there are numerous similarities between Hurricane Sandy and Hurricane Katrina including the amount of measured rainfall and the amount of storm surge and flooding.  Similar to Katrina, a large number of insurance claims resulting from Hurricane Sandy will require the determination of whether the damage was caused by wind or caused by water.

Destruction & Damages: Katrina vs. Sandy

Hurricane Katrina Superstorm Sandy
Homes Damaged or Destroyed 214,000 (Louisiana) 305,000 (NY state only)
Deaths 1,836 So far 121
Storm Surge 14 feet, funneling to 28 feet at New Orleans 12.5 feet
Measured Rainfall 15 inches 13 inches
Monetary Cost in Damages/Loss $125B So far $71B
Persons Displaced 1,000,000 1,000,000


Compounding the issue, claims will also require a determination on the source of water (i.e. did the water originate from infiltration through the building envelope (roof or walls) or was the water due to flooding). Flooding and rising water could be the result of swelling rivers, storm surge, inundated drains, and sump pump failures.

Determining the root cause of the damage will be necessary as most owners’ insurance policies do not cover damage from flooding and owners must buy flood insurance separately as part of a FEMA managed program. While some owners are required to purchase separate flood insurance as part of their mortgage due to their location, other areas outside of these flood-prone areas commonly experience flooding during these large hurricane events.

Our experience handling previous disasters, including Hurricane Katrina, revealed that most of the damage to structures was due to water and flooding and it was difficult to find structures that were only damaged as a result of wind. An accurate allocation of wind damage versus water damage, including an allocation of the repair costs associated with each causation, will be required by insurers as part of their analysis of Hurricane Sandy claims.

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