Extreme Weather Most Likely to Impact Future Claims

Extreme weather shifts have been documented in the United States in recent years that have affected insurance policyholders throughout the country. The U.S. Global Change Research Program, a federal program that coordinates funding and research related to factors influencing the global environment, completed a national assessment in 2014 that states these changes have included “excessively high temperatures, heavy downpours, and in some regions, severe floods and droughts.” It’s important insurance personnel take note of how the weather is changing to better understand what to expect and what could cause an increase in claims and damages.

Hot Temperatures/Droughts

The National Centers for Environmental Information notes four types of droughts, depending on what is impacted.

Many history books mention the Dust Bowl that ravaged the Southern Plains in the 1930s and caused severe dust storms that killed people, livestock, and crops during the Great Depression. But more recent droughts, caused by prolonged higher temperatures depleting moisture in soil and plants, have also created economic hardship.

In the 1980s, a three-year drought covered 36% of the United States, particularly California. It is considered the most expensive in recorded U.S. history causing an estimated $39 million in damages, according to EnvironmentalScience.org. And starting in 2012 and lasting almost two years, at least 60% of the United States experienced a severe drought, which affected more than 80% of productive agricultural land.

Droughts can impact more than crops and livestock. These drier conditions also increase risk for wildfires because of the high temperatures and dried out wood and vegetation. Over time, it can affect a home’s foundation. Droughts don’t occur as suddenly as other weather events, such as hurricanes or tornadoes; therefore, it may be more difficult for insurance policies to cover damages.

From 1980-2019, there were 25 droughts caused damages worth more than a billion dollars, representing costs that would not have been incurred had the event not taken place and insured and uninsured losses. The average drought cost $9.5 billion, and the Consumer Price Index-Adjusted total loss equaled $236.6 billion, according to the National Integrated Drought Information System.

Heavy Precipitation and Floods

Increased precipitation, among other factors, has led to problematic flooding in parts of the country. Photo Credit: “High Water” by Hans Braxmeier/ CC BY 4.0

Despite several states being affected by warmer temperatures, increased precipitation and flooding have become problems in other areas.

The U.S. Global Change Research Program assessment states heavy downpours have been occurring more frequently nationwide in the last three to five decades with the greatest change taking place in the Northeast, Midwest, and Upper Plains.

Increased water can be caused by heavy or prolonged precipitation, snowmelt, thunderstorms, storm surges from hurricanes, or ice or debris dams. Human factors include failures of dams and levees, altered drainage, or land-cover alterations, such as pavement.

The Federal Emergency Management Agency (FEMA) also differentiates between damage caused by water or by flood, which could affect insurance claims and what is covered.

Floods are defined as being temporary conditions of partial or complete inundation of otherwise dry land by the overflow of inland or tidal waters, a rapid accumulation or runoff of surface waters from any source, and mudslides. Policyholders may need specific flood insurance for it to be covered. However, FEMA considers rain coming in through wind-damaged windows, doors, or holes in walls or the roof resulting in standing water or puddles as windstorm damage rather than flood, and that could be covered by a homeowner’s insurance policy.

The Insurance Information Institute reported insured losses due to natural disasters in the United States in 2018 totaled $52 billion. Of that, floods and flash floods accounted for $1.2 million in insured losses.

Hurricanes and Storms

Hurricane data shows the storms are getting stronger and more prevalent. Photo Credit: “Storm” by Free-Photos/ CC BY 4.0

Hurricanes produce the most expensive and catastrophic damages, and there have been substantial increases in intensity, frequency, and duration for hurricane activity in the Atlantic Ocean, according to the Center for Climate and Energy Solutions (C2ES). This is likely caused by warmer ocean temperatures and higher sea levels.

Hurricane Katrina, which hit the United States in 2005, still holds the record as the most expensive hurricane, causing $41.1 billion in insured losses, $16.1 billion in losses from flooding, and $2-3 billion of insured losses to offshore energy facilities, according an Insurance Information Institute report on Hurricane Katrina on its fifth anniversary. The 2017 hurricane season was one of the costliest, as it included hurricanes Harvey, Maria, and Irma, which had damages that altogether totaled $300 billion in 2020 dollars. This represents costs that would not have been incurred had the events not taken place and insured and uninsured losses, according to National Oceanic and Atmospheric Administration National Centers for Environmental Information.

Tornadoes, hail, and thunderstorms are also showing upward trends in the number of storms causing financial loss. The Insurance Information Institute reported that severe thunderstorms accounted for $14.1 billion in losses, or 27% of the 2018 insured losses. This storm escalation will likely increase the number of claims adjusters need to handle.

Winter Weather

Snow and cold waves can cause insurance claims. Photo Credit: “Auto” by Harald Matern / CC By 4.0

Winter storms have also increased in frequency and intensity since the 1950s because there is additional moisture in a warmer atmosphere, which produces more snowfall when temperatures fall below freezing.

Winter storms and cold waves, which can damage residential and commercial properties, caused $3 billion in insured losses in 2018, the Insurance Information Institute reported.

Expect the Extreme

Each of these weather events could cause major damages to electronics and other specialty equipment, but not everything will be covered by insurance. StrikeCheck can help assess the scope of the damage and the cause of loss to make it easier for adjusters to handle property insurance claims quickly and accurately. Our Lightning Verification Report offers another tool to verify claim information by providing the number of lightning flashes and strokes during a 7-day search period for a 5-mile radius.

Don’t wait until a devastating storm occurs to find out how we can help.

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