When tornadoes touched down in Montgomery County, Maryland and other parts of the state on June 5, it was an unusual experience for many residents. After all, the mid-Atlantic region isn’t known as a hotbed of tornado activity. But tornadoes are occurring more frequently and often in regions where this phenomenon isn’t common, sparking questions about whether a homeowner’s insurance policy covers tornado damage.
The Bad News: Tornadoes Are Shifting Eastward
Historically, the Central Plains region of the US has been known as “tornado alley” due to the frequency of these events. But recent data shows the incidence of tornadoes is becoming more pronounced in areas you might not expect, including the Southeast and Midwest.
A study published in the Journal of Applied Meteorology and Climatology concluded that the threat of tornadoes has been steadily shifting eastward since 1951, based on data about tornadoes rated F/EF-1 or stronger during that timeframe. (A tornado is rated EF-1 if it has wind gusts estimated at 86-100 mph.) One map shows that activity in the eastern US increased by 12% from 1986 to 2020, with over 10,000 tornadoes recorded.
When events like these happen, it raises the question, “Would I be covered in this situation?” Given that a tornado usually causes severe damage, just seeing images of the devastating effects can create anxiety and concern.
The Good News: You’re Covered with the Right Policy
Most standard homeowner’s policies and high-net-worth homeowner’s policies cover “windstorm,” which includes tornadoes. Windstorm is only an excluded exposure in a few states.
This is very different from hurricanes, which are often treated as a separate exposure, especially in coastal areas. In these regions, some carriers include wind coverage on your policy, but with a separate, usually higher, deductible. With other carriers, you’ll need a separate wind policy to cover damage from a hurricane or named tropical storm. Note that if you have a separate wind-only policy and your home is damaged by a tornado or other wind-related event, the wind policy (not the homeowner’s policy) will respond to the claim.
The Fine Print: The Policy Specifics Matter
When it comes to protecting your assets from tornado damage, three aspects of your homeowner’s policy play an important role.
Guaranteed Replacement Cost Coverage
If you experience significant tornado damage, it will cost much more to repair or rebuild your home today than it would have just a short time ago, due to inflated material and labor costs. That’s why advisors like B. F. Saul Insurance recommend securing guaranteed replacement cost coverage.
As opposed to covering your home up to a specified limit, guaranteed replacement cost covers the full cost to repair or build your home in the event of a covered claim (minus the deductible). That means you can restore your home to its previous state, without having to sacrifice to stay within a stated policy limit. If you have a luxury home with unique, high-end features—like tile imported from Italy or an ornate wine cellar—guaranteed replacement cost coverage is a must.
Additional Living Expenses
Even minor tornado damage will force you out of your home for months; if the home needs to be rebuilt, it could take years. In the interim, you want to be sure your insurance covers the cost to rent a suitable temporary home. Size and location are important, especially if you have school-age children or you commute to a job outside the home. And with rents on the rise, the cost can be exorbitant. One B. F. Saul client needed to spend nearly $8,000 a month for a rental similar to their $2 million home.
Every insurer handles Additional Living Expenses differently: Some provide the coverage automatically, while others treat it as an endorsement. The key is to ensure the carrier will cover the cost to rent a comparable home. With premiums on the rise, some consumers who own a secondary home opt to drop the Additional Living Expenses endorsement to bring down the premium if it’s feasible to live in the other home temporarily.
Deductible
In some states—primarily those where tornadoes are historically common—the insurer might set a separate deductible for tornado damage. And though Maryland tornadoes are still relatively rare, if you live in the DMV region you should pay attention to your deductible and its impact if you experience a major loss.
If you carry a high-net-worth homeowner’s policy, you might have a large loss deductible that applies when your claim hits a minimum amount (often starting at $50,000). Though fire and tornado claims can easily exceed the threshold, most large loss deductibles do not apply to windstorm. It’s important to work with your insurance advisor to understand your financial exposure and decide if it’s worth self-insuring more of the risk by taking a higher deductible.
How an Independent Insurance Advisor Can Help
While you can’t reduce your exposure to tornadoes, working with a trusted independent insurance advisor can give you greater peace of mind about this potential risk.
An insurance advisor will review your risk and recommend a policy that provides the best coverage at the right price. They’ll also make suggestions you might not think about, like ensuring the policy covers the cost to remove fallen trees even if they don’t damage your home.
If a tornado strikes your home, your advisor can help you deal with the aftermath. Advisors like B. F. Saul Insurance can recommend vendors that provide critical services like emergency repairs and water mitigation. We also help manage the entire claim process, removing the administrative burden from your shoulders and ensuring you achieve the optimal outcome.
For owners of high-value homes, B. F. Saul Insurance is the right independent broker to help protect your sizable assets. We understand the top risks for high-net-worth individuals and families, we work with insurers that cater to this market, and we bring the expertise to help you obtain the best coverage at an affordable price.
Contact the personal insurance specialists at B. F. Saul Insurance to learn how we can help protect your home and other valued assets.
