Much of the damage caused by the storm is the result of more than a foot of rain to some parts of the East Coast. Vermont in particular is “experiencing its worst flooding in a century,” says Tim Doggett, principal scientist.

The loss estimate includes wind and storm surge damage to onshore property and contents, automobiles, ALE, demand surge, as well as direct and indirect business interruption losses.

Damage from flooding, including flooding generated by storm surge, is not covered by a standard homeowners' or renters' insurance policy, though there are some exceptions.

Flood damage to vehicles is covered if comprehensive coverage was purchased.

Added to the insured loss estimate is the impact of additional living expenses (ALE) doled out by insurers to the millions who were ordered to evacuate. Mandatory evacuation is not always covered by a homeowners' policy but “these losses are often paid for reasons of good will,” says AIR.

Slideshow: Hurricane Irene Damage in Photos

Doggett says there was some inconsistency between winds of 85 mph in North Carolina reported by the National Hurricane Center (NHC) and readings of onshore instruments on winds of 50-60 mph.

“A similar disparity was observed along the length of the East Coast,” he says. “It appears that the winds aloft were not being transferred efficiently to the surface.”

Hurricane Irene made landfalls Saturday morning in North Carolina and Sunday in Little Egg Inlet, N.J. and Coney Island, N.Y. as a Category 1 storm, according to the NHC.

Hurricane Jeanne in 2004 affected many of the same states as Hurricane Irene and caused about $4.15 billion (in 2009 dollars) in insured losses, making it the 10^th costliest storm in U.S. history.

The ninth costliest hurricane is Hurricane Frances, also in 2004. Frances caused $5.21 billion in insured losses.

Hurricane Irene—if insured losses end up at the high end of AIR's estimate—would eclipse Frances and fall just under the eighth costliest storm, Hurricane Rita in 2005, which caused $6.18 billion in insured losses.

The Boston-based modeling firm earlier released an insured loss estimate for the Caribbean of between $500 million and $1.1 billion.

Claims Rolling In

State Farm, the top insurer of the states affected by Hurricane Irene, says it received more than 37,660 homeowners' insurance claims as of midday Aug. 30. The insurer has gotten more than 4,410 auto insurance claims. State Farm is still calling the claims count “very premature” and it expects it to increase as homeowners return to assess damage.

About 7,575 homeowners' claims have come from New Jersey, with New York and Maryland close behind with 6,692 and 6,683 claims, respectively, says State Farm. The insurer says its has deployed more than 1,200 catastrophe claim representatives to assist thousands more state-based employees.

About 80 percent of premiums written by regional insurer Providence Mutual comes from Massachusetts, Rhode Island, and New Jersey. President and Chief Executive Officer Sandra Parrillo says most claims are coming from New Jersey and Rhode Island.

Claims Providence Mutual is receiving similar calls for claims as other companies, such as damage from fallen trees and food spoilage due to power outages. However, many calls are for flood losses.

“We have to tell them that wouldn't be covered,” Parrillo says. “There is some coverage for sump pump back-ups but mostly it isn't covered.” However, the insurer doesn't stop at a declination letter. Providence assists policyholders in getting federal disaster aid if available.

Irene's Final Chapter Not Written

From a commercial insurance perspective, FM Global Executive Vice President Jonathan Hall says the final chapter on Hurricane Irene has not been written because flooding is still occurring in places like Vermont and New Hampshire.

“Intuitively you think nothing is up there but there are lots of cities and towns built along the rivers, with a good amount of retail,” Hall says. Flooding also remains a factor in New Jersey.

FM Global says New Jersey and Pennsylvania account for the most claims so far. Hall predicts property losses will continue to manifest as people return to their businesses after taking care of their homes.

“Loss estimates will continue to creep up,” he says. “This is a big event that affected a lot of territory from Puerto Rico to Canada, and it did a lot of damage.”

Hall says he thinks there will be a lot of insured flood losses. Business interruption will play a role in losses but not as much as an event with “widespread devastation,” like destroyed buildings or points of entry.

“Ports aren't destroyed, trains and airlines are up—so there will probably be less of a business continuity aspect to losses,” he explains. “The average loss will be for short-term clean-up and spoilage.”