Gustav damage could reach $10 billion

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NEW YORK (CNNMoney.com) -- Hurricane Gustav could inflict as much as $10 billion in damage, making it one of the costliest storms in U.S. history.

Risk modeling firm Risk Management Solutions estimated that Gustav, which made landfall Monday morning in Louisiana, could cost the insurance industry between $4 billion and $10 billion in onshore and offshore losses. That would make Gustav one of the ten most expensive storms the country has ever experienced.

The Newark, Calif.-based firm AIR Worldwide Corp., another risk modeling agency, offered a similar, but more hopeful assessment, predicting that onshore losses alone would only climb as high as $4.5 billion.

Those numbers took into account damage done to homes, offices, factories as well as interrupted business activity, but did not incorporate the impact of flooding.

As Gustav spared the Gulf Coast region however, some firms revised their forecasts. Eqecat Inc. said Tuesday it expected the amount of onshore insured losses to fall somewhere between $3 billion and $7 billion as a result of the storm. The firm initially projected the storm to cause up to $10 billion worth of damage.

It often takes days or weeks after a major storm hits to assess the full extent of the damage.

While staggering, the estimates for Gustav fall far short Hurricane Katrina, which ravaged the Gulf Coast region in 2005, resulting in $41.1 billion in property damage alone, according to the Insurance Information Institute. Adjusted for inflation, Katrina resulted in more than $43 billion in insured damage.

Nor do the estimates for Gustav come anywhere close to Hurricane Andrew, which caused $22.9 billion in damage on an inflation-adjusted basis when it struck Florida and Louisiana in 1992.

Still, those numbers are roughly in line with federally supported computer projections. Gustav could produce $8 billion in property damage, according to a software program used by the Federal Emergency Management Agency and the National Institute of Building Sciences that calculates potential losses from natural disasters such as hurricanes and earthquakes.

By Tuesday morning, forecasters had downgraded Gustav to a tropical depression. Still, the storm is expected to drench parts of Louisiana, Texas, Mississippi and Arkansas through Thursday.

Gustav is just the second hurricane to make landfall so far this year. Hurricane Dolly swept through Southwest Texas in July, causing as much as $600 million in damage according to preliminary estimates provided by Insurance Information Institute.

Now, all eyes turn to Hurricane Hanna, which is currently located in the Bahamas. The Category 1 storm is expected to make landfall along the Eastern seaboard coast sometime Friday.