INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; media@iii.org
NEW YORK, April 29, 2011
— Auto, home and business insurers have launched a broad response to the tornadoes that caused severe loss of life and extensive property damage across six states on Wednesday, April 27, according to the Insurance Information Institute (I.I.I.). The mobilization comes near the conclusion of a month in which the deadliest twisters in living memory struck the United States.
“Insurers are the nation’s economic first responders, and these companies have the financial and human resources to respond effectively to the widespread damage that occurred this week in Alabama, Arkansas, Georgia, Kentucky, Mississippi and Virginia,” said Dr. Robert Hartwig, an economist and president of the I.I.I. “Homes can be rebuilt, and automobiles replaced, but most Americans will remember this tragic week as the one in which the U.S. saw its greatest number of tornado-related fatalities in 37 years.”
The U.S. generally sees about 1,200 tornadoes in any given year but a preliminary count indicates 877 have already touched down nationwide year-to-date, with 685 of them occurring in April 2011, the
National Oceanic and Atmospheric Administration’s (NOAA) National Weather Service reports.
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 this same time period as the costliest natural disasters. But in the past three years (2008-2010), severe thunderstorms, and the tornadoes they spawned, have caused about $30 billion of that $97.8 billion total. Moreover, a 2009 A.M. Best study found that the June 8, 1966, tornado in Topeka, Kansas, was the costliest U.S. tornado on record, causing $2.1 billion in damage (in 2009 dollars), based on total damages, not just property insurance losses. The next four costliest (based on total damages, in 2009 dollars) occurred on May 11, 1970, in Lubbock, Texas ($1.6 billion); May 3, 1999, in Oklahoma City, Oklahoma ($1.4 billion); April 3, 1974, in Xenia, Ohio ($1.1 billion); and May 6, 1975, in Omaha, Nebraska ($970 million).
“Given the insurance industry’s brief respite in recent years from major hurricanes, with 2008’s Hurricane Ike the lone exception—and its collective ability to build claims-paying capital despite the economic downturn—auto, home, and business insurers are financially well-positioned to pay the daunting number of claims that are coming their way,” Dr. Hartwig stated.
HAVING SUFFICIENT COVERAGE
Standard homeowners and business insurance policies cover wind damage, including that caused by tornadoes, to the structure of the building and its contents. However, you should make sure your coverage limits reflect the cost of rebuilding the structure, and of fully replacing your personal belongings.
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 policy’s ALE provision 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 also covers 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 on the issue (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:
- Be prepared to give your agent or insurance company representative a detailed description of the damage to your property. Your agent will report the loss to your insurance company or to a qualified adjuster who will contact you as soon as possible in order to arrange an inspection of the site.
- If it is safe to access the area, take photographs of the damaged property. Visual documentation will help with the claims process and can assist the adjuster in the investigation.
- Prepare a detailed inventory of all damaged or destroyed personal property. Make two copies—one for yourself and one for the adjuster. Your list should be as complete as possible, including a description of the items, dates of purchase or approximate age, cost at time of purchase and estimated replacement cost.
- Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the destroyed property.
- Make whatever temporary repairs you can. Cover broken windows and damaged roofs and walls to prevent further destruction. Save the receipts for any supplies and materials you purchase as your insurance company will reimburse you for reasonable expenses incurred by making temporary repairs.
- Secure a detailed estimate for permanent repairs to your home or business from a licensed contractor and give it to the adjuster. The estimate should contain the proposed repairs, repair costs and replacement prices.
- If your home is severely damaged and you need to find other accommodations while repairs are being made, keep a record of all expenses, such as hotel and restaurant receipts.
ADDITIONAL RESOURCES
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
Insurance Information Institute, 110 William Street, New York, NY 10038, (212) 346-5500