Just days after Hurricane Sandy pummelled the east coast of the United States, and made her historic turn inward towards the New Jersey coast, insurance estimates began rolling in, and the news wasn't good. The storm, which affected a broad area, particularly devastated the states of New Jersey, Pennsylvania, and New York. Many in the tri-state area and beyond suffered severe or moderate property damage, flooding, power outages and more. Now that the clean-up for Hurricane Sandy has begun, insurance companies are attempting to gauge just how expensive this catastrophic storm really was and what the real cost of this natural disaster looks like. Here is a look at preliminary figures from the damage Hurricane Sandy caused and an in-depth look at just how much money the superstorm is costing insurance companies as a result.

Total Estimated Cost of Damage is Staggering
The total estimated cost of damage wreaked by Hurricane Sandy is nothing short of staggering. An article released by the Associated Press on Nov. 2, 2012, estimates the total damage caused by Hurricane Sandy to be up to $50 billion. (The total was projected by Eqecat, a catastrophic risk management consulting firm, which indicated that the damage caused by the storm was between $30-$50 billion.) The damage is comprised of property damage, loss of business, an increase in living expenses and more.

Cost to Insurance Companies Projected to Be Much Less
Another finding in Eqecat's report is that although the total amount of damage is estimated at $50 billion, the costs that insurance companies will incur from Hurricane Sandy are considerably less. The report indicated that insurance companies can expect to pay between $10-$20 billion. The low end of this figure, while significantly reduced from that of the total damage incurred, is still a hefty price tag to pay. Hurricane Sandy is already more expensive than many severe hurricanes from the past, including 2008's Hurricane Ike, 2004's Hurricane Ivan and even the much overhyped Hurricane Irene from 2011.

Why the Lower Price Tag for Insurance Companies?
There are plenty of reasons why the insurance companies got a lower price tag. For one, many homeowners' insurance policies have tricks and do not cover the cost incurred from flooding. In order for flood claims to be paid, a consumer must have already purchased a flood policy prior to the arrival of Hurricane Sandy. In addition, the damage estimates include costs that are not covered by insurance policies such as loss of wages, power outages and increased costs of living expenses.

High Short-Term Costs, Low Long-Term Effect
While the staggering cost of Hurricane Sandy is still being calculated, insurance companies and risk management firms are trying to pinpoint whether the damage done is short-term or if it has the potential to cripple the economy and insurance industry on a long term or permanent level. According to an article released by the Huffington Post on Oct. 31, 2012, the rebuilding will start and continue at a feverish pace, and the economy will not be impacted over a long period of time. Meanwhile, an article released by SeekingAlpha.com projects that the insurance industry will take a hit, but quickly recover once the cleanup has been completed.

The Bottom Line
Hurricane Sandy ravaged the east coast and left New Jersey coastal towns, New York City and plenty of other locations with billions of dollars worth of damages. With cases of flooding, structural damage, power outages and more, the clean-up process for Sandy is certain to be long and expensive. Only time will tell if the numbers projected by Eqecat are correct, and as more reports of damage come through, it certainly seems as though the catastrophic risk management firm has done its homework. Let Sandy serve as a great reminder of how families should take appropriate measures for protecting their assets and finances from natural disasters.

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