Updated October 21, 2019: In May 2011, the deadliest U.S. tornado in at least half a century ripped through Joplin, Missouri. The powerful twister killed 158 people, injured more than 1,100, damaged or destroyed 7,500 homes and triggered nearly $2.2 billion in property insurance claims.
All of that death and destruction happened in less than 40 minutes.
To be clear, the Joplin disaster is an extreme example of the toll that a tornado can exact. But it’s far from the only example, as roughly 1,000 tornadoes touch down in the U.S. every year, causing billions of dollars worth of damage. In May 2019, federal weather forecasters released reports of more than 500 tornadoes in a 30-day period.
And while tornadoes are typically confined to the central U.S., in places like Joplin, they’ve been reported in all 50 states. So regardless of whether you’re in Missouri or Maine, what will your homeowners or renters insurance policy cover if a tornado strikes your residence?
Assessing your tornado damage coverage
If you have homeowners insurance, your policy generally will cover damage to your home and personal belongings caused by a tornado. If you have renters insurance, that policy will cover damage to your belongings, but the landlord’s property insurance will cover structural damage.
If your residence incurs water damage during a tornado, you may be covered, but it ultimately depends on the type of damage.
For example, flood damage isn’t covered by homeowners or renters insurance. But if rainwater enters your home through an opening in your home caused by tornado winds or debris, the resulting water damage would be covered. Learn about flood insurance here.
Check your policy to make sure you have adequate windstorm coverage; in some cases your insurer may require you to have a separate wind/hail deductible which requires you to pay more out of pocket for those damages before your insurance kicks-in. In certain areas, many middle-market insurers may exclude windstorm coverage on their policies, and you may need to find a separate wind/hail policy to be purchased alongside their home insurance.
In addition to reimbursing you for property damage, homeowners and renters insurance also pays for living expenses — such as hotel bills and restaurant meals — if a tornado makes your home unlivable and you're forced to live elsewhere, says Loretta Worters, a spokeswoman for the Insurance Information Institute.
You should also consider additional coverage for personal valuables if you own a lot of expensive electronics, artwork, collectibles or other high-value items. This extra protection comes in the form of a coverage endorsement or by simply increasing your coverage limits for certain valuables.
Choosing the right policy
To minimize the financial damage of a tornado, we suggest modifying your policy so that your personal property is covered at its replacement cost (RCV). Replacement cost coverage reimburses you for the cost of repairing or replacing items at their current cost. For your homeowners insurance policy in particular, you’ll want replacement cost coverage for your home's structure — including the roof — as well as your contents.
We can help you compare and buy homeowners insurance here.
The lower-cost option is actual cash value (ACV) coverage, which may save you a nominal amount on your premiums, but will cost you when it comes time to file a claim. Actual cash value pays the current, depreciated value of an item that was damaged instead of the cost of replacing the damaged item with a new one.
The Texas Department of Insurance offers this example:
Let’s say you bought a sofa last year for $2,000. If you have ACV, the insurance company may pay you only $1,500 since that’s how much the sofa is worth now. But if you have RCV, the insurance company may fork over $2,100, as that’s how much the company figures it would cost to buy a similar sofa now.
We also suggest taking an inventory of your belongings and keeping it updated — here's how. Additionally, it's a good idea to take photos or video of the personal belongings in your home in case substantial proof is needed for an insurance claim.