atastrophe modeling firm AIR Worldwide says ‘Superstorm’ Sandy will cause between $7 billion and $15 billion in insured losses—possibly making the unprecedented storm the third-costliest in U.S. history.

The estimate includes wind and storm surge damage to residential, commercial and industrial properties and contents, as well as automobiles. Additionally, the estimate includes additional living expenses and business interruption. It also takes into account demand surge.

And the storm system that produced Sandy isn’t finished producing damage as it moved inland into Pennsylvania and New York before it turns up to head to Canada.

Eqecat, another catastrophe modeler, earlier released an insured-loss estimate from Sandy of between $5 billion and $10 billion, with total economic losses of $10 billion and $20 billion.

Slideshow: Sandy’s Aftermath

Using the high end of AIR’s insured-loss range, Sandy would be eclipse 2008’s Hurricane Ike as the third-costliest hurricane in U.S. history. Ike caused about $13 billion in damage to mainly Texas and Louisiana, as well as other inland states.

If insured losses from Sandy land anywhere within the modelers’ estimates, it will be known as one of the 10 costliest hurricanes ever to hit the U.S.

That is, if Sandy’s damages will be considered damage caused by a hurricane. Sandy was downgraded to a post-tropical storm system just before it made landfall in New Jersey. This fact has one important consequence to insurers and consumers—whether insurers will be able to enact the hurricane deductible. Instead of a flat deductible of, for example, $1,000 on a home valued at $200,000, a hurricane deductible if typically 2 percent of a home’s value—or $4,000 for the $200,000 home.

Robert Hartwig, president of the Insurance Information Institute, says he’s received word the hurricane deductible will not apply in Connecticut, but the matter has yet to be made clear in New Jersey.

“We’re trying to get clarification,” he says. “The storm wasn’t technically classified a hurricane, but it did have winds strong enough for a hurricane and I think hurricane warnings were still in effect on the coast.”

Hartwig says Sandy will be remembered as one of the most notable in history—and not necessarily for its insured losses, since much of the losses aren’t insured by the private market. For example, municipalities often self-insure. State and federal property are not insured in the private market. Flood perils are insured by the federal government—if residents and businesses even have the coverage.

“Think about the extent of the disruption—The New York Stock Exchange closing for two days [for the first time in more than 100 years]; the airlines grounded; the subways and trains out of service,” Hartwig says. “This will go down as a meteorological legend that did something very rare. It hit a concentrated, urban area.”

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