Raleigh, NC , March 16, 2012 — While it is too soon to tell what the insured losses will be from the tornadoes battering the South and Midwest, already hundreds of homes, businesses and autos have been damaged or destroyed. Insurers, however, have responded quickly, sending adjusters to help disaster victims with their insurance claims, according to the Insurance Information Institute (I.I.I.).
Last year’s trend of unusually damaging storms appears to be continuing into 2012. At the end of January parts of Alabama, Arkansas and Mississippi were hit by severe thunderstorms, which spawned hailstorms and powerful tornadoes. The storm resulted in two people being killed, more than 100 injured and 250 to 300 homes damaged or destroyed. January tornadoes are relatively rare with an average of 10 to 15 each year across the United States. Fortunately, insurers have the financial and human resources to respond effectively to these tragic natural disasters, the I.I.I. noted.
There were 1,725 tornadoes in 2011—the costliest type of natural disaster for the year, based on insured losses, according to Munich Re. The huge cost of repairing and reconstructing tornado damaged property in 2011 can be attributed to the large percentage of twisters that hit urban areas, leveling entire neighborhoods.
Last year was also the deadliest thunderstorm season in more than 50 years, with 593 fatalities. In Joplin, Missouri, a city of some 50,000 people, an EF5 tornado, categorized as the most damaging with wind speeds of more than 200 mph, swept through the town on May 22, 2011, killing 162 people and damaging more than 7,500 structures, including a major hospital. It was the most damaging tornado in more than 60 years. The Joplin disaster came on the heels of a series of other tornadoes of historic intensity that swept across the south. Tornadoes caused $97.8 billion in insured losses in the U.S. between 1990 and 2009, making these weather events second only to hurricanes ($152.4 billion), over the same time period, as the costliest natural disasters.
INSURANCE COVERAGE FOR TORNADOES
Standard homeowners and business insurance policies cover wind damage, including that caused by tornadoes, to the structure of the building and its contents. Homeowners insurance policies also provide for additional living expenses (ALE). ALE coverage pays the costs of living away from home if you cannot inhabit your house due to damage from an insured disaster. The ALE provision in your homeowners policy covers hotel bills, restaurant meals and other living expenses incurred while your home is being repaired or rebuilt.
If you own a business that has been damaged, business income (also known as business interruption) insurance, covers the profits your business would have earned, based on your own financial records, had the disaster not occurred. This includes additional operating expenses incurred as a result of the disaster, such as the extra expenses involved in operating out of a temporary location.
Damage to cars from a tornado is covered under the optional comprehensive portion of a standard auto insurance policy. Seventy-seven percent of insured drivers choose to purchase comprehensive coverage in addition to liability insurance, according to the National Association of Insurance Commissioners’ latest data (2008). Comprehensive coverage reimburses auto insurance policyholders for loss due to theft or damage caused by something other than a collision.
The I.I.I. offers the following advice to speed the insurance claims settlement process following a tornado:
- Storms Contribute to Uptick in Missouri Claims Recoveries (news.onlineautoinsurance.com)
- How to Cash Your HomeOwner’s Insurance Claim Check (raleighmortgageguy.com)
- Why Can My Mortgage Company Hold My Insurance Claim Check? (raleighmortgageguy.com)
- Tips to Speed Your Homeowner’s Insurance Claim (raleighmortgageguy.com)