Tornado Insurance for Homeowners
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UPDATED: Sep 24, 2020
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Tornadoes are usually considered a form of wind damage by most insurance companies, but there are locations where such storms are so common or the amount of damage they cause so severe, that the insurance companies will exclude tornadoes from the standard policy to prevent having to make many large payouts on a regular basis. To determine whether your policy excludes tornadoes, check your policy’s list of exclusions or contact your insurance company for clarification.
All insurance policies will have exclusions, meaning that there will be damages it will not cover. For most homeowners, wind related damages are automatically covered, but some regions may experience tornadoes on such a regular basis that insurance companies have chosen not to cover the phenomena. If this is the case in your area, you can still get the coverage you need, even if you have to buy it separately from a high risk insurance company.
High risk insurers do not typically offer standard insurance packages, but provide policies which fill in gaps in other policies. You will have to pay for the coverage, generally at a steep cost, but it will cost you less to pay for special insurance for many years than to be faced with replacing your home and property out of your own bank account.
Another aspect that should be considered is whether your policy pays the actual cash value of damaged property, or the replacement cost. Actual cash value means that you will be paid the original cost of the property minus depreciation over time, while replacement cost insurance means that your property will be replaced regardless of the current market value of the item or required materials. Replacement cost insurance generally costs a little more than actual cash value, but it will never be as expensive as the cost of paying the difference between cash value and the actual cost out of pocket.