Reconstruction value of all homes in path totals nearly $89 billion
According to new data by CoreLogic, there are 431,810 single-family and multifamily homes along the Texas and Louisiana coasts with a reconstruction cost value (RCV) of approximately $88.63 billion are at potential risk of storm surge damage from Hurricane Laura based on its projected Category 3 status at landfall. These estimates are based on the August 25, 8 a.m. Eastern Standard Time National Hurricane Center forecast.
This analysis includes the total number of homes and RCVs by metro area within the cone of uncertainty--including the Houston metropolitan area. As Hurricane Laura approaches the Gulf Coast, its path will become more certain and the below metropolitan areas at risk will narrow.
CoreLogic catastrophe and weather experts expect the 2020 hurricane season to continue on its above-average trend given warmer oceanic temperatures, which presents financial risk to homeowners and businesses in property services, like insurers and mortgage lenders. Hurricane-driven storm surge can cause significant property damage when high winds and low pressure cause water to amass inside the storm, releasing a powerful rush over land when the hurricane moves onshore.
"The coincidence of two catastrophes--a damaging hurricane season and the ongoing global pandemic--underscores the importance of the correct valuation of reconstruction cost, one of the core tenets of property insurance," said Tom Larsen, principal, insurance solutions at CoreLogic. "Homeowners, mortgage lenders and insurers need to work together to ensure properties are fully protected and insured. CoreLogic data has found a correlation in mortgage delinquencies and catastrophes, which could point to a serious issue of underinsurance trends."
To confirm adequate coverage, insurers must bi-annually consider cost of materials and labor, as well as demand surge, to completely rebuild a home, while homeowners must communicate frequently with their insurance agents to relay home improvement activities. Understanding property risk while ensuring adequate insurance coverage is the key to keeping homeowners and the U.S. economy strong and resilient.