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If you live in an area that is prone to tornadoes and other severe weather, you are not alone. Many of the country’s most vulnerable cities and towns also experience the highest frequency of severe weather events. In fact, one in every 13 U.S. residents lives in a tornado-prone area, according to the National Weather Service (NWS). To make matters worse, more than half of all homes in Tornado Alley are unoccupied during tornado season from June through November. That means that any property without a permanent resident has a much higher risk of being damaged or destroyed by a twister. And if you live in one of these high-risk areas, it could cost you significantly more than someone else to insure your home or business against similar risks.
What is tornado insurance?
Tornado insurance is a type of coverage that protects you against the cost of repairing or rebuilding your property after a tornado. It often comes in the form of a homeowners policy or an end-of-the-year addition to your auto insurance policy. The National Weather Service (NWS) classifies a tornado as an “F-5” on the Fujita scale, with the higher the rating, the more severe the damage can be. Tornado damage ranges from minor dents and scratches to total roof and wall collapse and even complete loss of a structure. Each state has its own guidelines for determining when to issue a disaster declaration, and as a result, your state may require additional coverage above and beyond the minimum required by the Federal Emergency Management Association (FEMA).
Why is tornado insurance so important?
Tornado insurance helps protect you and your family from the financial consequences of a tornado. The two most common reasons homeowners need to replace their homes are: The home is completely destroyed, and The structure is severely damaged but still standing. This requires significant repairs, and even if the homeowner has enough savings to make the repairs, he or she may be faced with expensive mortgage payments and other bills. A home worth less than the amount owed on it may result in a reduction in property taxes and a higher risk of losing the home to foreclosure. And even if your home is not destroyed by a tornado, it could still suffer enough damage to make it worth less than the amount you still owe on it. For example, a house may be in a high-risk area for tornados, but the area may also be susceptible to a wide variety of other hazards, such as hurricanes and flooding.
How much should you pay for tornado insurance?
This is one of the most important factors to consider when choosing a policy. While there are a few companies that offer rates as low as $500 per year, the average cost of homeowners insurance in tornado-prone areas is $1,500. That’s because an F-5 tornado is so powerful it is likely to cause extensive damage to any structure in its path. If your home or business is damaged or destroyed by a tornado, it is not uncommon for the repair costs to top $1 million. In other words, most policies will pay $25,000 or less to replace the structure, but they may not cover the cost of rebuilding everything from scratch, like the kitchen and bathrooms, and new appliances, fixtures and furniture in the home.
What is the best type of home insurance for tornado-prone areas?
Customers in tornado-prone areas often ask about several different types of coverage, but there’s usually only one that is truly necessary: a special endorsement that covers damage from tornadoes. Homeowners who live in high-risk areas should look for a policy with either the special tornado coverage endorsement or an automatic yearly increase (AUW) for their annual premium. These are two of the most common ways homeowners insurance companies differentiate their policies. An automatic yearly increase (AAW) is triggered by a certain event, such as a severe storm causing widespread damage or severe weather in general. Many homeowners may not realize that hail is also considered a severe storm. If your home is damaged by hail, it is likely to be significantly more expensive to repair than damage caused by wind or rain. And a tornado can cause significantly more damage than either storm type.
Consider an Underwriting Requirement
If your area has experienced a large number of severe weather events over a set period of time, or if you live in one of the most severe tornado-prone areas, you may be required to carry an underwriting requirement. An underwriting requirement is any additional policy provision imposed by your insurance company that increases your cost of coverage. Some of these requirements are designed to protect the company from lawsuits and ensure that policyholders have enough coverage to protect them from potential claims. But many of these requirements are simply higher rates for the same coverage. For example, some policies in high-risk areas include a provision that excludes coverage for landscaping. However, this type of coverage is very important for homeowners in tornado-prone areas. It helps protect the home from the storm damage that comes from flying debris and falling trees, which can cause significant damage to landscaping, including trees themselves.
Research Damage and Loss amounts
Once you have a rough idea of what your insurance policy should cost, you should start doing some research to figure out how much a real tornado would cost. Your closest insurance agency, online reviews and local government websites are good places to start. You can also contact your homeowner’s or auto insurance broker to ask for help. You can also check with your local cooperative extension office. Many states have a cooperative extension office that is dedicated to helping individuals and families understand their insurance needs and options.
Learn About Special Coverage Available to Protect You From Tornadoes
There are a number of different types of coverage available to help reduce your risk of losing your home in a tornado. These include endorsements that protect your home from wind damage and reduce your deductible, as well as endorsements that provide coverage for water, fire and flood damage. A commonly purchased umbrella policy can provide coverage for a wide variety of risks, including wind, water, fire and even earthquakes. Many insurers offer what they call a “mega policy” that combines several types of coverage, including one that protects your home from wind damage. If you have some time to read through your policy, you may be able to identify where coverage for wind-related damage is missing and ask your insurance agent for help. Some companies may also offer free wind-damage assessment services, which will help you figure out the extent of the damage and help you determine what type of coverage you need.
Not every high-risk area has the same requirements for coverage.
What you learn from researching your state’s requirements may help you decide which type of coverage to purchase, but it’s still important to shop around and compare rates before you buy a policy. Some companies may charge less for a similar policy to another company, but they may not offer the same level of protection if an F-5 tornado hits your area. You may want to choose a company that offers the best combination of discounts, service and coverage for your area, regardless of how much risk you pose. That’s a good way to protect your home, vehicle and other valuable assets.
Find the Home Insurance for Tornado-Prone Areas for your home is not as hard as you think. You should know first, what your home needed and after that you can search the policy which fit for your needs.
