The potential damages from Hurricane Milton, estimated at around $34 billion, may position it among the most financially devastating weather events in American history.
And that's merely an approximation of the loss inflicted by the hurricane itself, excluding any destruction resulting from at least nine tornadoes that tagged along with the tempest. The hurricane is speculated to have caused at least 24 fatalities across Florida. However, the devastation could've been more severe, as suggested by the preliminary estimate.
Typically, residential insurance policies don't cover damages caused by flooding; instead, they cover damages due to the hurricane's strong winds. The majority of flood-related damages, however, are handled by the National Flood Insurance Program (NFIP), under the supervision of the Federal Emergency Management Agency. Homeowners residing in flood-prone regions usually have to obtain flood insurance from their mortgage lenders. Nonetheless, a significant portion of flooding damage occurs in areas that aren't considered high-risk, making coverage less common.
Milton's primary losses stemmed from wind damage, primarily caused by the unusual behaviors of the storm, according to CoreLogic.
As Hurricane Milton approached shoreline, it manifested an unusual interaction with the jet stream over the southeastern United States, enhancing the strength of northerly and northwestern winds, which are generally considered lighter. To add to the intrigue, wind gauges in coastal Florida measured hurricane-force winds in Sarasota, south of Milton's landing point, effectively dividing the storm into two separate lanes of harmful, hurricane-force winds.
Contrary to expectations, wind damage was fewer than anticipated given the storm's wind intensity, and storm surge flooding damage was minimal, specifically in Tampa Bay's populated areas, as per CoreLogic's analysis.
"Given the high concentration of properties in Tampa Bay area, including older residential and high-value commercial structures, significant insured losses were possible," mentioned Tom Larsen, associate vice president hazard and risk management at CoreLogic.
Milton's losses are likely to fall significantly beneath CoreLogic's projected loss of up to $47.5 billion from Hurricane Helene, which occurred merely two weeks prior to Milton. However, it might still raise Milton's ranking to among the 10 costliest hurricanes to strike the United States in regards to insured losses, including NFIP coverages.
The upper tier of CoreLogic's insured loss estimate, amounting to $22 billion in wind damage and $6 billion in flood damage, would place Milton among the 10 most financially devastating storms to affect insurers, residents, and businesses, surpassing 2008's Hurricane Ike once inflation is accounted for. CoreLogic currently ranks Ike as the ninth most costly storm in terms of insured losses, but its position will be overtaken by Helene.
The lower limit of CoreLogic's insured losses estimate would be $17 billion, with homeowners and business insurance obligations accounting for $13 billion in wind damage and $4 billion in covered flood losses.
The proximity of Milton to Hurricane Helene, which also impacted parts of the Florida Gulf Coast, presents challenges for Florida residents and their insurers, as per CoreLogic's report. Moreover, the Florida insurance market is currently grappling with issues, such as the withdrawal of several national insurance companies from the market and the financial struggles faced by numerous local private insurers.
Homeowners' insurance premiums in Florida have historically been significantly higher than in other states, and Citizens Property Insurance Corp., the state-backed nonprofit home insurance company designed as a last resort insurer, managed over 1.3 million homeowners' policies. If it functioned as a private entity, it would be insolvent due to the high volume of claims it would process. However, as a public entity, it has the authority to impose a premium surcharge on all policyholders across the state to ensure all claims are covered, provided claims surpass its financial reserves. This premium hike inevitably increases costs for all insured Florida homeowners and businesses.
Businesses in flood-prone areas often need to purchase additional flood insurance to protect against potential losses, as standard homeowners' insurance policies typically do not cover flood damage. The unusual behaviors of Hurricane Milton, such as its interaction with the jet stream, resulted in less wind damage than anticipated, but the storm still has the potential to rank among the 10 costliest hurricanes in terms of insured losses, including business damages.
