Hurricane Katrina: What to do now?

By Carrie Coolidge

updated 2:14 p.m. ET Sept. 2, 2005

NEW YORK - Hurricane Katrina will go down in history as one the most intense catastrophes ever to strike the U.S. The full economic impact will not be known for some time, but it is already predicted to be one of the costliest, possibly surpassing the insured losses caused by Hurricane Andrew in 1992 ($20.8 billion in 2004 dollars), Charlie in August 2004 ($7.4 billion) and Ivan in September 2004 ($7.1 billion).

At this point, the reporting of claims is relatively slow, because many people have not yet gone back to their homes to assess the damage. Indeed, much of the affected areas remain closed to nonemergency personnel, including adjusters, which makes estimating the damage unachievable at this time.

"It is difficult to get people in and on the ground to assess how many claims there will be, so we don't yet fully know the depth and breadth of the damage," says Scott Spencer, worldwide appraisal manager for Chubb's Chubb Personal Insurance. "We are already responding to areas where we can." It could take as long as 30 to 45 days before all devastated areas are seen, he adds.

Among the largest property/casualty insurers covering home owners in Louisiana, Mississippi and Alabama are State Farm Mutual Group, Allstate and St. Paul Travelers. While the potential loss to the property casualty insurance industry due to Hurricane Katrina will add up to billions of dollars, in most cases, damage from flooding (i.e., the levees being breached in New Orleans) is excluded from homeowners and commercial property insurance policies.

The U.S. government, through the National Flood Insurance Program, provides basic coverage for flood damage. (Since the areas affected are now designated natural disaster areas, if a property owner does not have flood insurance, the Federal Emergency Management Agency may be able to provide some financial assistance to help with the cost of the damage. Assistance can be provided either by loan or cash grants. (Please refer to www.fema.gov for more information.)

Insurers are encouraging their policyholders, as soon as they are able to return to their homes, to begin documenting the damage. "People can help the claims recovery process by taking photographs and videotape of what they find," says Chubb's Spencer. "Take an inventory of what was damaged. People are quick to throw things out, and they sometimes forget what was there. It is important to document everything as you begin going through things."

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Don't be so quick to throw away things that might be restorable. "Don't throw away things, such as molding, if the home is historic," advises Spencer. "Preserving and saving unique architectural elements of a home is far better than replacing it."

If an antique is damaged, you might want to remove it from the house, but set it aside rather than throwing it away. Things like antique furniture, or floor tiles, may be worth preserving and may be salvageable, says Spencer. If the carpet and wallpaper are damaged, however, save a piece of it before you get rid of it. "This way, you will know what was there when it's time to replace it," he adds.

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