Following the destruction that the state has faced, experts feel that premiums will be headed skyward.
Experts are now saying that well after the gas lines have been repaired and electricity has been fully restored, New Yorkers will continue to feel the pain felt from the massive superstorm Sandy as it sends their homeowners insurance premiums higher.
Predictions have placed payments from private insurers between $10 and $20 billion for the storm.
The damages from the winds, alone – not to mention the flooding – has placed this most recent storm among the five most expensive American storms that have occurred in the last quarter century. New York took the hardest hit, according to estimates from disaster modeling firms. They found that this state alone saw between $3.4 billion and $6.8 billion in damages.
Because of the sheer size of the event, it is very likely that homeowners insurance premiums will rise.
According to a Florida State University professor, Randy Dumm, who studies the impact of hurricanes on homeowners insurance, “Given the magnitude of the event, it would not be a surprise to see an increase in the price of premiums on Long Island, particularly for homes in coastal areas.”
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The premiums in that area have already been rising steadily in Long Island as well as many of the other areas of the East Coast, over the last few years. Within the last decade, the amount that people have been paying for homeowners insurance has nearly doubled. Other regions have seen even faster increases.
According to a University of Miami finance professor, Andrea Heuson, in South Florida, the impact of Hurricane Andrew in 1992 brought a doubling in premiums within a span of only three years. Similarly, the Gulf Coast saw that same occurrence following 2005’s Hurricane Katrina.
Homeowners insurance experts have said that it is unlikely that New York will face quite that same skyrocketing expense following Sandy. However, they still feel that customers should be aware that the prices will not simply remain steady. Insurers in that area have already been paying higher premiums in the event that a major storm could one day occur. Therefore the difference that the storm will make will exist, but it shouldn’t be anything near what has been seen in the Gulf Coast.