The surge of destructive and deadly twisters last week has put the spotlight on tornado insurance once more, as consumers attempt to understand the type of coverage that it will provide, including why many homeowners are still forced to pay repair bills related to tornado damage regardless of their policies.
The Insurance Information Institute has said that the majority of insurance policies for homeowners, businesses, and vehicles will include tornadoes as an element of their standard severe weather and wind coverage. Typically speaking, renters’ and homeowners’ insurance will cover the damage to a property that was caused by a twister. But many should be aware, damage caused by flooding, is not a covered event on these types of insurance plans. Flood insurance is a separate policy that has to be purchased on its own.
Other items that affect the type of insurance policy and the amount of protection is what has been selected in coverage and how much the insurer will pay toward the damage caused by a tornado. That said, even with tornado coverage, the victims of these severe weather events will likely need to pay for at least a portion of the rebuilding expenses, themselves.
According to a 2008 study, this is because approximately 64 percent of American homes have been undervalued in their insurance coverage. Though there has been a decrease in real estate values since the start of the recession, there has been a sharp increase in building costs in most regions. Unfortunately, many people have insured their homes based on their resale value and not the cost to rebuild.
Furthermore, renters have been especially affected by tornadoes, as the Insurance Research Council has indicated that only 43 percent among them have renters’ coverage.