Hurricane Lane, the Category 4 storm that is bearing down on Hawaii, threatens almost 50,000 homes with a reconstruction cost of around $8bn, according to analysis from CoreLogic.
The property information firm said it was only looking at single-family residential properties that were deemed to be at high risk in the study, which means the actual economic cost of a direct hit could be much larger.
However it noted that Hurricane Lane is expected to continue to weaken as it approaches the islands.
The most populous island of Oahu, which is home to around 1 million people, is at greatest threat according to CoreLogic with 2,312 homes at extreme risk at a potential reconstruction cost of $617mn. Meanwhile, another 33,771 homes on the island are at very high risk, which could cost $5.16bn.
Maui threatens the next highest construction bill with 7,143 homes at extreme or high risk with a total reconstruction value of $1.16bn.
Less of a risk is the island of Kauai where 3,510 homes are at risk at a potential cost of $923.5mn.
With 1,881 homes at risk with an estimated reconstruction cost of $424.9mn, Hawaii itself - otherwise known as the Big Island - faces the least damage.
The Insurance Information Institute (III) has drawn a comparison between Hurricane Lane and Hurricane Iniki, which battered the Hawaiian islands in 1992. In today’s dollars the total cost of the storm would have been around $2.8bn.
The Institute said homeowners and rental policies in Hawaii tend to provide cover for almost all standard perils such as fire and liability but exclude hurricanes.
“In Hawaii, homeowners and renters generally purchase hurricane and flood insurance policies separately to protect their property from those specific natural disasters, and to supplement their homeowners and renters insurance policies,” the III explained.
Most hurricane insurance policies have a “72 hour clause”, which means that once a hurricane watch or warning is issued by the National Weather Service, damage sustained over the following three days would be covered by a hurricane policy, according to Hawaii’s Department of Commerce & Consumer Affairs, Insurance Division.
Comprehensive auto policies cover wind, hurricane and flood-caused property damage to vehicles. And business insurance policies, which include interruption cover may come into play given Hawaii’s significant tourism industry, the III said.
In a forecast yesterday, JLT Re said Lane was likely to make its closest approach to the Big Island as a Category 3 later today.
“Category 2 impacts to Maui, and category 1 impacts to islands further north, including Oahu and Kauai will occur slightly later,” JLT Re said.
“While current forecasts anticipate the core of highest winds will stay offshore, any shift to the right in the track will elevate the probability of damaging winds.”
The broker said that models put the core of highest hurricane force winds just offshore. However, it notes that any shift east in the ultimate track will quickly escalate damage potential from wind.