By Kathy Chu
USA Today
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NEW ORLEANS — Hurricane Gustav packed less of an economic punch than expected, leading analysts to estimate insured damage at between $2 billion and $10 billion. But Gustav is one of only many storms that could wreak havoc on the U.S. this year.

Hurricane Gustav packed less of an economic punch than expected, leading analysts to estimate insured damage at between $2 billion and $10 billion. But Gustav is one of only many storms that could wreak havoc on the U.S. this year.

"Insurers exhaled a partial sigh of relief, but it's still going to be an expensive event," says Robert Hartwig, president of the Insurance Information Institute. "And we're still looking at more potential landfalls."

Even if insured losses from Gustav were to reach as high as $10 billion — the upper limits of projections from risk-modeling firms — that would amount to only a fraction of the $41 billion in devastation caused by Hurricane Katrina in 2005. Those estimates, however, don't include flood damage, which added $16 billion in losses to Katrina's economic impact.

If actual insured losses fall in the middle of analysts' estimates, Gustav would still rank among the 10 costliest hurricanes to hit the United States. But it'll be weeks, if not months, before the full extent of damage is known.

The National Weather Service, meantime, has identified four other storms that could make landfall in upcoming days: Tropical Storms Hanna, Ike and Josephine in the Atlantic and Karina in the Pacific.

Analysts expect insured losses from disasters to surge in upcoming years as more people move to coastal areas and the number — and severity — of storms increase. Last year, insurance coverage on coastal properties totaled $8.9 trillion, up 24% from 2004, according to AIR Worldwide, a risk-modeling firm. Florida and New York have the highest amount of insured coastal property, with more than $2 trillion per state.

A day after Gustav hit, the bulk of insurance claims filed have been related to rain damage, which is generally covered under homeowners' policies, according to Elizabeth Stelzer, a spokeswoman for Nationwide, a large insurer in Mississippi and Texas.

But many homeowners won't be able to file claims until they can return home and assess the damage. Both insurers and homeowners hope to avoid the legal disputes that arose after Katrina about whether damage should be covered by homeowners' or flood-insurance policies.

Homeowners' policies insure against wind damage. Flooding is covered under a separate policy sold by the federal flood insurance program. Katrina's deadly combination of wind, storm surge and flooding due to levee breaches often made it hard to determine whether wind or water had wrecked homes.

In the first year after the hurricane, sales of flood insurance policies surged on the Gulf Coast, only to dip in subsequent years as major storms bypassed the region. Still, the number of flood policies in the three hardest-hit states — Louisiana, Mississippi and Alabama — rose 35%, to 635,966 policies, between July 2005 and July 2008. Butch Kinerney, a spokesman for the National Flood Insurance Program, expects "minor gains" in flood insurance sales after Gustav.

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