How Much Do Natural Disasters Cost the United States?

2020 hurricane projections
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car damages caused by hurricane
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March 26, 2020

How Much Do Natural Disasters Cost the United States?

natural disaster

Nature enriches all our lives in countless valuable ways, but it can also unleash staggering levels of devastation. Florida residents are all too familiar with the dark side of nature, especially when it comes to the destructive power of hurricanes.

Hurricanes aren’t the only source of harmful natural forces. Many parts of the country are frequently subject to wildfires, tornadoes, flooding and hail.

Natural Disaster Property Damage by the Numbers – 2019

The National Centers for Environmental Information (NCEI) tracked 14 natural disasters that resulted in more than a billion dollars of property damage. Florida was thankfully only on the list once – Hurricane Dorian – and we were lucky enough to dodge the brunt of the damage.

In terms of dollar amounts, disaster attribution included:

$20 Billion – Non-Hurricane Flooding: The most expensive natural disaster of 2019 was the Missouri River flooding in March 2019. It was one of the costliest inland flooding events in U.S. history. The Arkansas River (June 2019) and Mississippi River (March 2019) also flooded.

$13.9 Billion – Tornadoes, Hail and Severe Weather: The most expensive storm system of 2019 ripped through the central United States from the Rockies in Colorado up through Pennsylvania and New Jersey in May, resulting in an estimated $4.5 billion of damages. Other tornadoes and severe storms caused extensive damage in the South, Southeast and Midwest.

$6.6 Billion – Tropical Storms and Hurricanes: Tropical storms out-damaged hurricanes in 2019. Tropical Storm Imelda caused $5 billion of damage when it came up through the Gulf of Mexico and landed between Houston and Beaumont, dropping 43.39 inches of rain along the Texas coast. Hurricane Dorian could have been a lot worse had it made landfall in Florida as a Category 5. It had weakened to a Category 1 hurricane when it made landfall in North Carolina, only causing $1.6 billion in damages.

$4.5 Billion – California and Alaska Wildfires: Although still devastating, tragic and inconvenient for residents, 2019 was nowhere near as bad as the previous two year for California wildfires. Although it received less media coverage, the wildfires in Alaska also caused a lot of damage, resulting in the loss of 2.5 million acres of forest. The 2019 losses were a far cry from 2018 and 2017, when California wildfire damages were estimated to be $24.5 billion and $18.7 billion respectively.

The Good News

These natural disasters were certainly tragedies, but 2019 did turn out to be a less devastating year than many in recent memory. The billion-dollar events in 2019 resulted in about $45 billion in damages and 44 deaths. In 2018, natural disasters caused $92.8 billion of damages and 247 deaths.

Both the past years paled in comparison to 2017, a year when Florida and Texas were hit by two staggeringly devastating hurricanes. Natural disasters cost the nation $318.9 billion in property damage and the lives of 3,278 people in 2017.

Insurance Claim Payouts

The Insurance Information Institute (III) also tracks the property damage cost of natural and manmade disasters, but their methodology and calculations are different than the NCEI. III is primarily interested in the insured loss and the price paid by insurance companies and reinsurers. They calculated an “insured loss” of $52.3 billion in 2018.

If 2018 resulted in $92.8 billion in damages but the insurance companies only paid out $52.3 billion in claims, policyholders were left on the hook for $40 billion.

The Costliest Disasters for Insurance Companies in U.S. History

When adjusted for inflation, the costliest hurricanes in recent memory take up the top four spots on the most expensive natural disasters for insurers:

  1. Hurricane Katrina: $51.9 Billion
  2. Hurricane Maria: $25.6 – $30.7 Billion
  3. Hurricane Irma: $22.5 – $27.6 Billion
  4. Hurricane Harvey: $18.4 – $20.4 Billion

It should be noted that those numbers exclude the cost of flood damage that was covered by FEMA flood insurance policies.

All but two of the top 10 most expensive natural disasters for insurers were hurricanes. The fifth most expensive wasn’t a natural disaster, but a man-made travesty – the September 11attacks are estimated to have cost the insurance companies just under $26 billion when adjusted for today’s dollars. The other non-hurricane disaster in the top 10 list was the 6.7 magnitude Northridge Earthquake in 1994.

Although hurricanes tend to dominate insurance claim payments the years big ones hit, they’re often not the most expensive events for insurers. In 2019, 2016, 2015, 2014 and 2013, severe weather – which includes events like tornados, high winds and hail – are the most common cause of covered damages.

Hail and high winds are the bane of the insurance companies, so its unsurprising to see the majority of claims are attributed to those natural disasters. The high costs of those extreme weather events are exactly why it’s often so difficult for policy holders to get their claims treated fairly.

If you ever find yourself in the middle of a serious natural disaster but your insurance company is undervaluing your claim or using the fine print to deny your claim, consider contacting an independent claims adjuster or legal representation.