Catastrophe modeling firm AIR Worldwide says 'Superstorm' Sandywill cause between $7 billion and $15 billion in insuredlosses—possibly making the unprecedented storm the third costliestin U.S. history.

The estimate includes wind and storm surge damage toresidential, commercial and industrial properties and contents, aswell as automobiles. Additionally, the estimate includes additionalliving expenses and business interruption. It also takes intoaccount demand surge.

And the storm system that produced Sandy isn't finishedproducing damage as it moved inland into Pennsylvania and New Yorkbefore it turns up to head to Canada.

Eqecat, another catastrophe modeler, earlier released aninsured-loss estimate from Sandy of between $5 billion and $10billion, with total economic losses of $10 billion and $20billion.

Slideshow: Sandy's Aftermath

Using the high end of AIR's insured-loss range, Sandy would beeclipse 2008's Hurricane Ike as the third-costliest hurricane inU.S. history. Ike caused about $13 billion in damage to mainlyTexas and Louisiana, as well as other inland states.

If insured losses from Sandy land anywhere within the modelers'estimates, it will be known as one of the 10 costliest hurricanesever to hit the U.S.

That is, if Sandy's damages will be considered damagecaused by a hurricane. Sandy was downgraded to a post-tropicalstorm system just before it made landfall in New Jersey. This facthas one important consequence to insurers and consumers—whetherinsurers will be able to enact the hurricane deductible. Instead ofa flat deductible of, for example, $1,000 on a home valued at$200,000, a hurricane deductible if typically 2 percent of a home'svalue—or $4,000 for the $200,000 home.

Robert Hartwig, president of the Insurance InformationInstitute, says he's received word the hurricane deductible willnot apply in Connecticut, but the matter has yet to be made clearin New Jersey.

“We're trying to get clarification,” he says. “The storm wasn'ttechnically classified a hurricane, but it did have winds strongenough for a hurricane and I think hurricane warnings were still ineffect on the coast.”