Hurricane Sandy, or Superstorm Sandy, is one of the most devastating storms in recent memory.  Unfortunately, we’ve already had to post a similar blog to this one about the effects of Hurricane Katrina along the gulf coast back in 2005.  This time, we’d like to explain the effects of Hurricane Sandy and how long lasting they can be not only along the Eastern Seaboard, but throughout America as a whole.  I’d like to specifically focus on our insured’s in Pennsylvania and New York, more specifically, the Philadelphia and NYC area, in hopes of better preparing them for another storm of this magnitude.

If you’re living in the Philadelphia or New York Metropolitan area, chances are, you weren’t ready for a storm of this magnitude.  The question now is what can you do to be ready the next time?  You should start by understanding what coverage will take care of damages caused by a hurricane or “superstorm”.  Firstly, flooding caused by something like this is going to be covered under insurance from the National Flood Insurance Program (NFIP).  The NFIP is a government regulated insurance program that is designed to cover businesses and homeowners in areas susceptible to flooding, such as flood plains and coastal areas.  This will most likely NOT be covered by your homeowners insurance or a sewer and drain coverage under you homeowners insurance policy.  Sewer and Drain coverage covers you if you have water backup from the sewer line or sump pump overflow.  In catastrophic events, such as a hurricane or a flood, this coverage will not come into play.  This distinct difference is something you must know, especially if you’re living and working in the Philadelphia, Pennsylvania area.  The reason we say that is that there are a higher percentage of people in Philly who own homes at ground level than in New York City.  New York obviously has more people and is larger, but as a percentage of people in the city, Philadelphia has more residents living and owning homes at ground level.  This is something important to note whether you live in Philadelphia or New York and wise to think about when you review your home or business insurance. If you or anyone you know are interested in reviewing their insurance, please don’t hesitate to contact us.  We’ll review your current insurance policies and also review whether or not flood insurance is a good option for you.

Another important note that needs to be taken into consideration are the long-lasting effects from Hurricane Sandy.  One thing most insurance buyers do not realize, is that large, catastrophic events such as Hurricane Sandy, don’t just affect residents along the Eastern Seaboard.  Hurricane Sandy caused about $50 Billion worth of damages, the second costliest storm in US History (behind Hurricane Katrina at $108 Billion). This caused two ripples throughout the insurance industry.  The first is that it caused insurance companies to take a harder look at the east coast.  Insurance companies will now think longer and harder about underwriting and pricing risks along the east coast.  For many years, hurricane damage failed to make its’ way up the eastern seaboard far enough to effect the Philadelphia, New Jersey, New York area.  This not only brought to light the real threat of hurricanes to this area, but the exorbitant amount of damages this can cause.  The Northeast Corridor is a megalopolis, which has a population of 50 Million and growing.  The sheer amount of people, business, and infrastructure in this area makes for an awfully expensive combination when dealing with a natural disaster such as a hurricane.  So, we expect this area to see not only rate increases in the future, but harder underwriting guidelines as well.  One of the more far reaching effects a natural disaster like this causes, is rate increases throughout the entire United States.  In the event of a natural disaster such as this, the insurance companies pay out tons of money ($50 Billion) worth of claims.  In order to recoup this type of money, they will have to take rate increases.  It would be unfair and unreasonable to expect only people living in the Northeast Corridor of the United States to pay for these rate increases, so the insurance companies will usually take rate increases across the entire United States in order to help pay for this kind of disaster.  This way, these residents aren’t unfairly “taxed” after receiving such a harsh punishment from the storm itself.  Everyone chips in a little bit and that’s one of the great things about how the insurance industry works.

In closing, please realize and understand the affects of these natural disasters.  My goal in writing this was to shed light on how our Philadelphia, Pennsylvania and New York, New York clients can be covered before an incident such as this.  And also to shed light on what comes AFTER the storm as well.  The affects after the storm, while felt more harshly in the areas which they occur, are still felt throughout the United States and the insurance industry as a whole.  We’re glad the Northeast Corridor has restored itself so quickly after these storms and proud of the insurance industry for paying out claims in such a timely manner and trying to do the best job possible for our clients!