Property insurance claims made in coastal communities after a tropical cyclone are complicated, as most standard homeowners’ insurance policies do not cover damage caused by flooding. A separate policy that covers flooding must be purchased by those whose properties are at risk of flooding. The Federal Emergency Management Administration administers a program that offers insurance coverage for properties at risk of flooding called the National Flood Insurance Program (NFIP).
This distinction between wind and flood damage is tricky, and the stakes are high for getting it right. After Hurricane Katrina, there were hundreds of lawsuits between property owners and insurers, attempting to determine whether a property was damaged by wind or by flooding by storm surge. And if the property was damaged by storm surge, was it damaged by wind first, which would mean the property insurer would have to cover that damage.
Hurricane Milton introduces a third type of hurricane damage into that complicated mix. Prior to landfall, the storm caused an outbreak of very strong tornadoes over a significant portion of the central and southern peninsula of Florida. Tornadoes are not uncommon in the outer rainbands of a landfalling hurricane, but the ones that happened in Milton’s outer bands were unusually strong; some of them were more like the large springtime Plains tornadoes than smaller tropical cyclone-associated tornadoes.
Another layer of complication after these two recent storms is the fact that Helene and Milton affected the same area just twelve days apart. The insurance industry, following precedent, considers Helene and Milton as separate storms. That means that if a homeowner did not make a claim from damage done by Hurricane Helene before Milton affected their property, they could face denial of a claim, delays in processing, or a reduced claim.
If insurance is sounding the alarm about expected payouts in an era of increased natural disasters, the timing of Helene and Milton are straining the entire industry. Reinsurance companies, which are insurance companies to the insurance companies, expect to be strained by the 2024 Atlantic Hurricane Season.
Increased incidence of severe and hazardous weather, including powerful hurricanes which destroy property with tornadoes, severe wind, freshwater flooding, and storm surge is driven by climate change. The 2024 Atlantic Hurricane Season will go down in the record books as one of the most costly and damaging, both in terms of property and human life.
As insurance companies sound the alarm, will this be the moment the United States finally gets serious about climate adaptation and mitigation?