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updated 9/2/2005 2:14:54 PM ET 2005-09-02T18:14:54

Hurricane Katrina will go down in history as one the most intense catastrophes ever to strike the U.S. The full economic impact will not be known for some time, but it is already predicted to be one of the costliest, possibly surpassing the insured losses caused by Hurricane Andrew in 1992 ($20.8 billion in 2004 dollars), Charlie in August 2004 ($7.4 billion) and Ivan in September 2004 ($7.1 billion).

At this point, the reporting of claims is relatively slow, because many people have not yet gone back to their homes to assess the damage. Indeed, much of the affected areas remain closed to nonemergency personnel, including adjusters, which makes estimating the damage unachievable at this time.

"It is difficult to get people in and on the ground to assess how many claims there will be, so we don't yet fully know the depth and breadth of the damage," says Scott Spencer, worldwide appraisal manager for Chubb's Chubb Personal Insurance. "We are already responding to areas where we can." It could take as long as 30 to 45 days before all devastated areas are seen, he adds.

Among the largest property/casualty insurers covering home owners in Louisiana, Mississippi and Alabama are State Farm Mutual Group, Allstate and St. Paul Travelers. While the potential loss to the property casualty insurance industry due to Hurricane Katrina will add up to billions of dollars, in most cases, damage from flooding (i.e., the levees being breached in New Orleans) is excluded from homeowners and commercial property insurance policies.

The U.S. government, through the National Flood Insurance Program, provides basic coverage for flood damage. (Since the areas affected are now designated natural disaster areas, if a property owner does not have flood insurance, the Federal Emergency Management Agency may be able to provide some financial assistance to help with the cost of the damage. Assistance can be provided either by loan or cash grants. (Please refer to www.fema.gov for more information.)

Insurers are encouraging their policyholders, as soon as they are able to return to their homes, to begin documenting the damage. "People can help the claims recovery process by taking photographs and videotape of what they find," says Chubb's Spencer. "Take an inventory of what was damaged. People are quick to throw things out, and they sometimes forget what was there. It is important to document everything as you begin going through things."

Don't be so quick to throw away things that might be restorable. "Don't throw away things, such as molding, if the home is historic," advises Spencer. "Preserving and saving unique architectural elements of a home is far better than replacing it."

If an antique is damaged, you might want to remove it from the house, but set it aside rather than throwing it away. Things like antique furniture, or floor tiles, may be worth preserving and may be salvageable, says Spencer. If the carpet and wallpaper are damaged, however, save a piece of it before you get rid of it. "This way, you will know what was there when it's time to replace it," he adds.

Safety precautions
Of course, people should use the right safety precautions before entering a home that has been damaged. Wear gloves and masks, because things have been saturated with unclean waters. But before entering, make sure all power is off. "If the front door is sticking, it may be because the ceiling is lagging," says Spencer. "If this is the case, don't force your way through the front door, because the ceiling may collapse."

If a building is completely saturated, use great caution. "If the building is structurally unsound, don't go in," adds Spencer. "It may be time to contact a contractor to reinforce the structure before you go inside. It is not worth going in to save a piece and losing your life in the process."

Likewise, use great caution if there is surface water around the house. In this case, don't bother pumping out the basement. "If the water pressure outside is such, it may push your walls in," says Spencer. "It is better to wait until the water recedes before you pump out the basement."

Take care of the articles that are the most valuable to you first, such as items with great sentimental value. If important documents or photographs are damp, put wax paper between the pages, which will help dry them out. You may also choose to ship the articles to a family member who is farther away to do this for you.

One positive outcome from this disaster will be that construction codes will change for the better, predicts Spencer. "One of the results of Hurricane Andrew was that Florida became more diligent about creating new building codes," he says. "New homes were stronger. Last year, there were four hurricanes with much less damage than what would have been seen a decade ago because of the new building codes."

© 2012 Forbes.com

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