The Pacific Northwest Readies For Damage Estimations

December 10, 2007

Powerful Pacific storms smashed ashore along the Oregon, Washington, and British Columbian coasts earlier this month, bringing hurricane force winds, torrential rains, and widespread flooding.

Winds generated seas up to 48 feet high in some areas while soaking rain and wailing winds broke trees and curtailed electricity. Two people died and Interstate highways closed. Coast Guard and Navy rescue helicopters dispatched to rescue people stranded at home. Sewage treatment plants became overwhelmed and water systems contaminated.

Mudslides then blocked roads and caused resident evacuations as adjusters assessed the damage and began to help people recover.

Costs estimates remain preliminary.

“Damage in terms of dollars is unknown,” said Darrin Sanger, communications director, NW Insurance Council. “Companies believe they will have a stronger perspective on insured losses and the extent of the damage in the coming week as customers continue to file claims.”

What is covered?

Sanger expects homeowners to continue to misconceive what losses are covered in their policies. “Unfortunately, some people believe an insurance policy covers every kind of loss, and that’s not true. An insurance policy is a contract that clearly states what’s covered, the limits of that coverage and what losses are excluded.”

As he explained, flood coverage, is specifically excluded from standard home, renters and business insurance policies, but can be obtained through the National Flood Insurance Program (NFIP).

Further, certain types of water damage are excluded. For example, structural failure to a property that allows rain to penetrate the building and damage property is typically not covered, he said. However, damage due to water coming from within the structure usually is covered.

Who is covered?

The Federal Emergency Management Agency (FEMA) said less than 20 percent of Washington homeowners in Zone A floodplains have coverage through the National Flood Insurance Program. FEMA also reported only 25 percent of homeowners in Oregon have coverage, while fewer than 14 percent have coverage in Idaho.

Loretta Worters, vice president, Insurance Information Institute, said on average, 18 percent of homeowners living in flood prone areas carry flood insurance nationally.

Who is covering?

From the National Association of Insurance Commissioners’ report on marketshare, published in 2007, State Farm held the highest percentage of the federal flood market (as the administrators) in Oregon with 20.32 percent. Hartford Fire & Casualty’s 19.41 percent followed while Assurant, with 17.60 percent, rounded off the top three.

In Washington, Hartford covered the largest part of the market with 19.28 percent followed by Assurant with 16.60 percent and Zurich covered 15.39 percent.

The report showed State Farm in Oregon held the largest percent of the homeowners market with 25.11. Zurich came next with 18.99 percent and Allstate followed with 10.94 percent.

In Washington, the list mirrored Oregon in terms of top three carriers. State Farm lead with 17.97 percent¸ followed by Zurich with 17.04 percent and Allstate, 13.41 percent.

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