It's only April, and this year's tornado season is on track be the most costly ever for damages and homeowner insurance claims. As of April 18, 2011, 617 tornados had been recorded by the National Weather Service, compared to 203 during April 2010. According to the Insurance Information Institute, tornados have resulted in an average of $4.9 billion per year in homeowners insurance claims, and reached a record in $8 billion nationwide in 2006. You don't have to live in the Midwest's Tornado Alley to be a victim. These violent storms can and do happen throughout the U.S. at every time of year. Will your homeowners insurance cover the damage and what happens after a twister strikes?
Most standard homeowners insurance policies do provide coverage for damages caused under the broad term windstorm. This typically includes tornados. But as with all things insurance, don't assume your policy does. Get it out and read the exclusions and limitations, or call your agent and ask. (It's also worth repeating that no standard homeowners policy covers the flooding or water damage that can accompany a tornado. You need separate coverage for that.)
While you're at it, see how much coverage your policy provides. Even with the recent downturn in property values, if your policy is more than a few years old, it may not be sufficient to repair or replace your home and its contents in today's market.
After a Tornado Strikes
In the event of a catastrophic tornado, such as the one that recently devastated North Carolina, insurance adjusters are frequently among the first responders. They often bring in trained teams to assess the damage and distribute checks on the spot. Some even hand out prepaid debit cards for temporary lodging, food and other immediate necessities. If you're the victim of an isolated event, you may need to reach out to your insurance company first.
The first settlement check you get will most likely be an advance rather than a final payment. Even if it is an on-the-spot settlement, you have the right to reopen your claim later and file for additional damages. Should that be the case, you'll be really glad you put a video or detailed list of your home and its contents in an off-site safety deposit box.
If your home is mortgaged, your settlement check for home repairs will be made out to you and your lien holder, who probably has the contractual right to withhold a portion of the settlement payment until you can show proof that all necessary repairs have been made. You are, of course, responsible for the deductible according to your policy.
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