Hurricane Florence could cause record-high insured losses in Carolinas

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Red Cross preps ahead of Hurricane Florence

Red Cross Spokesperson Jonathan McNamara on preparations as Hurricane Florence approaches the U.S. coast.

As Hurricane Florence barrels towards the Carolinas, insurers are preparing for losses potentially exceeding $20 billion. Currently a Category 2 storm, Florence is expected to gain strength before making landfall in the area on Thursday night. Where in the states it specifically hits will determine the severity of the insured losses.

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“Charleston, S.C. has values near $20 billion alone,” Robert Morris, the president of Rampart Insurance Offices, told FOX Business. “That can hurt local, regional and local insurance, depending on the risk they have in that market.”

For those individuals insured through larger companies, the financial impact could be more challenging.

“Major catastrophic damage in those areas would result in higher premiums and less capacity in those zones,” Morris said.

Morris estimated that around 18 percent of homeowners are insured through State Farm, while Geico is one of the leading insurance companies for drivers.

Florence could turn out to be the most financially devastating hurricane to hit the area. In 1989, Hurricane Hugo caused insured losses of what would be equivalent to $20.5 billion today. Morris believes Florence could be even more damaging.

“The cost to repair is higher than it has ever been,” Morris said.

If the storm focuses more towards Virginia and Maryland, flooding may become an issue due to high rain totals over the last few weeks in the Washington, D.C., area.