Coastal Residents Need Plan in Hurricane Season

As the country makes its way through the 2010 hurricane season, it is important for coastal residents to heed the lessons learned from Hurricane Katrina in 2005 and be sure they have correct type and amount of insurance.

The Insurance Information Institute (I.I.I.) reminds consumers that Aug. 29, 2010 marks the fifth anniversary of the most costly insured disaster in U.S. history. Hurricane Katrina resulted in more than $41 billion in insured damage to homes, cars and businesses in six states. The National Flood Insurance Program (NFIP) paid an added $16.1 billion for flood-related losses.

As I.I.I. points out, Katrina's devastation shows the costly effects of not being properly prepared for disaster.

Among them:

1. Some individuals and business owners failed to acquire flood insurance. A lack of flood insurance led to uncovered losses to thousands of homes and businesses.
2. Many business owners, who failed to acquire the right kind and amount of coverage, including business interruption (business income) insurance, were never able to open their shops again.
3. A large number of policyholders did not take a home or business inventory before the disaster, thereby making the claims process harder.
4. Many homeowners and those owning businesses failed to update their insurance policies to reflect the present expense of rebuilding or replacing damaged property and found themselves underinsured.

According to a 2010 I.I.I. survey, nearly 75 percent of Louisiana and Mississippi consumers who had filed an insurance claim from Katrina considered themselves better prepared now than five years ago, compared with approximately half of the residents of those states who did not file a claim.

In addition, seven out of 10 Katrina claimants presently have an inventory of their possessions to document their losses following a disaster, compared with 50 percent of the nation as a whole.

On the flip side, 32 percent of respondents in Louisiana and Mississippi believe their homeowners' policy encompasses damage from flooding during a hurricane. That figure is twice the percentage in the nation as a whole, but still represents a surprisingly large number of people who remain uninformed regarding flood insurance.

While hurricanes are mostly inevitable in the Gulf Coast region, residents and business owners can make sure they're one leg up on the storms by having the proper insurance in place.