The insurance industry has been hit with hundreds of thousands of claims in the wake of recent hurricanes - but it's not just homeowners and business owners who are filing the claims. Car owners have flooded insurers with claims, the New York Times reports. Roughly 100,000 claims have been filed so far, with analysts expecting that number to climb as high as 500,000.
Unlike most homeowner's policies, which generally exclude flood damage, comprehensive car insurance policies do cover flooding, meaning flood victims should receive a partial - or even full - payout on their affected vehicles.
As a result, the auto insurance industry is experiencing a boon that will likely continue into 2018. According to Bloomberg Markets, drivers needing replacement vehicles in Hurricane Harvey’s aftermath could help September go down as one of the best U.S. sales months this year. Although the annualized rate is still seen slipping compared to last year’s brisk pace, the decline is expected to be less pronounced after as many as one million vehicles were lost or damaged in the late summer storm -- plus more in Irma and Maria that analysts say won’t show up in replacement demand for at least another month.
Consumers are expected to give the car insurance industry a slow and steady boost over the next several months, as claims are reported and payouts trickle in. Car dealerships will likely offer incentives and sales to capitalize on this opportunity. Car sales have been down in 2017, but the hurricane-related boost is expected to boost sales to near the fist-of-the-year projections.
While good news for consumers (and car companies) this will likely have an adverse effect on insurers. While larger insurance companies have the means to absorb such enormous payouts, smaller companies will likely be more affected. The New York Times explains that, in general, smaller companies have been inundated with underwriting expenses related to distracted driving, expensive car technology and more accidents.
Photo credit: Flickr/Mark Doliner
Sources: New York Times, Car Owners Inundate Insurers With Claims After Hurricane Harvey | Bloomberg Markets, U.S. Car Sales Stabilize As Insurance Checks Roll In