NEW YORK (CNN/Money) - Hurricane Isabel's current expected path could greatly limit the economic harm it inflicts, but the latest damage estimate still has it causing more than $1 billion in insured losses.

But even if the worst of the winds don't cause the level of damage feared earlier, the National Hurricane Center warned that Isabel could pose significant flooding damage throughout the mid-Atlantic and Northeast, due to heavy rains earlier this year.

Animation shows the course of Hurricane Isabel from 7:45 a.m. ET Wednesday to 7:45 a.m. Thursday.

Thursday afternoon officials with the National Hurricane Center said the center of the storm made land about 1 p.m. ET at Cedar Island National Wildlife Refuge, just north of Morehead City, N.C. The storm had sustained winds of 80 m.p.h. when it came ashore, with gusts up to 105 m.p.h., making a strong Category 2 hurricane. The 500-mile wide hurricane was hitting Virginia and South Carolina with heavy rains as well. (Click here for CNN.com's Hurricane Isabel coverage)

AIR Worldwide Corp., a catastrophe research firm serving the insurance industry, estimated Wednesday that the claims to the nation's insurers should come in between $1 billion and $2 billion, assuming the storm doesn't intensify or veer off its current track. A $1 billion insured loss would still be enough to make it among the nation's 10 most costly storms, and economic losses from such a storm are likely to be much higher.

The current path of the storm would take its highest winds across one of the least populated areas of the eastern seaboard, said Peter Dailey, the head of AIR's atmospheric sciences department.

"If you look at the map, there's a zone between Norfolk and Virginia Beach to the north, and Raleigh-Durham to the south, where there aren't a lot of major cities," he said. "That's where we expect the strongest winds to occur. Some of the coastal area that could be hit is swampy and not suitable for building. This might be the most minimal impact a hurricane of this magnitude hitting the U.S. East Coast could have."

And the insured loss estimates do not calculate the damages that could be caused by flooding in the mid-Atlantic region or even further north. The National Flood Insurance Program, a federal program, not private insurers, cover flood damage. Government agencies, such as the Army Corp. of Engineers and the National Oceanic and Atmospheric Administration (NOAA), have warned that heavy rains associated with Isabel could overflow already nearly full reservoirs and rivers.

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"If this had happened last year, when we were in a drought, it'd be a much different situation," said Army Corps of Engineers spokesman Pete Shugert. "The conditions right now are the same as they were in 1903, the record flood year in this [New York-New Jersey] district."

NOAA said drought or near-drought conditions proceeded Hurricane Floyd, which hit much of the eastern seaboard in 1999, which allowed more of the excess rain to be absorbed.

But this time it said that the last eight months have been the wettest ever recorded in Virginia and Maryland, and the second wettest recorded in North and South Carolina. In addition the center of Isabel is expected to travel up through Pennsylvania, West Virginia and New Jersey and New York, and those areas have also had exceptionally wet springs and summers. For example, NOAA said the Scranton/Wilkes Barre area of northeastern Pennsylvania has had double the normal rainfall since June.

NOAA warned that communities in the Potomac, Susquehanna and Delaware River basins are at particular risk, as well as smaller streams in New Jersey, Delaware, and eastern portions of Maryland, Virginia and North Carolina.

Flooding poses not only a threat to property but also to health and safety, said NOAA.

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"We've done such a good job of communicating the dangers of winds and storm surge that accompany hurricanes that flooding in now the number one cause of hurricane fatalities," said Max Mayfield, director of NOAA's National Hurricane Center. "Our challenge is to get the word out that inland flooding, in some cases far removed from where the storms come ashore, can pose serious danger."

The damage estimates don't include all the costs of lost business from store sales to tourism, including this year's Miss America Pageant, set for Atlantic City, N.J., this weekend. Most federal offices in Washington D.C. were closed Thursday in preparation for the storm.

Merrill Lynch retail analysts estimated Tuesday that national retail sales for September could be off between 0.5 and 1.0 percent due to the storm, even with many coastal residents buying plywood or other emergency supplies to prepare their homes. Economic losses can easily double the insured losses from a storm.