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October snowstorm could generate thousands of insurance claims (Insurance Information Institute)

Snow and ice-related damage caused more than $2 billion in claims payouts in 2010

10/31/11

NEW YORK, October 31, 2011 — The East Coast of the United States, from West Virginia north to Maine, is recovering today from a highly unusual snowstorm on the final weekend of October. Reporters with questions about the insurance coverage repercussions of the disaster can contact the Insurance Information Institute (I.I.I.).

Snow and ice storms, including those that occur before the official arrival of winter, are the third-largest cause of U.S. catastrophe losses, behind only hurricanes and tornadoes. Winter begins on Wednesday, December 21, 2011. From 1990-2009, winter storms resulted in about $25 billion in private-sector insurer claims payouts, according to ISO. Insured annual U.S. winter storm losses in 2010 totaled $2.6 billion, the highest losses from this peril since 2003, according to a January 2011 analysis by Munich Re.

“Standard homeowners and business insurance policies provide coverage for a wide range of snow and ice related disasters such as losses incurred due to burst pipes, wind damage and wind-driven rain, as well as damage caused by downed trees, limbs or other falling objects,” said Michael Barry, vice president of the I.I.I. “Car accidents caused by slippery road conditions are also covered under standard auto insurance policies.”

The I.I.I. offers the following information on insurance coverage for the
October 29-30 storm:

Auto Insurance Policies

  • Car crashes between two or more drivers caused by snowy and slippery roads are covered by standard auto insurance. A car that crashes into an object would generally be covered under the optional collision portion of an auto policy.
  • Physical damage to a car caused by heavy wind, flooding or fallen ice or tree limbs is covered under the optional comprehensive portion of an auto policy.

Homeowners Insurance Policies

  • Wind-related damage to a house, its roof, its contents and other insured structures on the property is covered under standard homeowners insurance policies. Wind-driven snow or freezing rain that gets into the home because it was damaged by wind is also covered.
  • Tree limbs that fall on a house or other insured structure on the property would be covered for both the damage the trees inflicts on the house and the cost of removing the tree. Damage caused by ice or other objects falling on the home is also covered.
  • Damage to the house and its contents caused by weight of snow or ice that creates a collapse is covered under standard homeowners insurance policies.
  • Freezing conditions such as burst pipes or ice dams, a condition where water is unable to drain properly through the gutters and seeps into a house causing damage to ceilings and walls, is covered. However, there is generally a requirement that the homeowner has taken reasonable steps to prevent these losses by keeping the house warm and properly maintaining the pipes and drains.
  • Melting snow that seeps into a home from the ground up would be covered by flood insurance, which is provided by the National Flood Insurance Program, and a few private insurers. Flood insurance is available to both homeowners and renters. Flood damage is not covered by standard homeowners or renters insurance policies.
  • Standard homeowners policies also include additional living expenses (ALE) in the event that a policyholder’s home is severely damaged by an insured disaster. ALE pays for reasonable expenses incurred by a policyholder when living elsewhere while their home is being fixed.
“Consumers who need to file an insurance claim should contact their insurance agent or company representative as soon as possible,” said Barry. “Let your agent know the extent of the damage to your property and start to document your loss with lists, receipts or photographs. If you have a home inventory, now would also be a good time to access it.”
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