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A Guide to Tornado Insurance: Best Companies and How It Works

Protect Yourself from Tornadoes: Get Home Insurance Quotes
Pro tip: Click on 2-3 companies to get the best rate

Over 1,000 tornadoes touch down in the U.S. each year, causing billions of dollars of damage to homes. Your home insurance probably already covers most types of tornado damage, but there are some key coverage issues to consider before you buy tornado insurance.

Quick Look: The Best Tornado Insurance Companies

What Tornado Insurance Covers

Tornadoes bring a unique set of risks that may not be present with other types of storms. Most home insurance policies cover these risks, at least in part, but there are some limitations you’ll want to keep in mind when buying coverage.

The most common causes of damage from tornadoes and storms that form tornadoes are:

  • Wind damage
  • Hail damage
  • Falling objects
  • Water damage

The most common type of homeowners insurance policy is an HO-3 policy or its proprietary equivalent, which protects your home against all perils (risks) except those that are specifically excluded from coverage. The good news is that all of the above risks have coverage, but you may only get partial coverage.

Water damage can be a particular concern if a storm causes flooding. A standard home insurance policy doesn’t provide coverage for overland flooding, which refers to water that touches the ground before entering your home.

Difference Between Tornado, Homeowners and Renters Insurance

In most cases, your homeowners or renters insurance covers damage caused by tornadoes but it’s important to understand policy limitations when choosing or adjusting your coverage.

Your home’s physical structure is covered for all perils (except exclusions) on a standard HO-3 homeowners insurance policy. The landlord’s insurance policy protects the building if you’re a renter. The notable limitation is roof coverage. Wind and hail accompanying a tornado can cause a lot of damage to a roof or even remove the roof altogether.

Roof coverage is often prorated or covered using a depreciation schedule. This means that you may be responsible for a sizeable percentage of the repair or replacement cost if your roof is damaged, depending on the age of your roof. Replacement cost roof coverage may be available as a rider for your policy, although not all insurers offer this option.

Personal property is usually insured for a list of named perils. Fortunately, this list includes most of the risks that come with tornadoes, like fire or lightning, windstorms and falling objects. Another concern may be the type of coverage provided by your policy.

Many homeowners and renters insurance policies cover most types of personal property using actual cash value (ACV). Actual cash value is a depreciated value based on age and usage. Similar to roof coverage, insurers cover the amount of remaining use for your personal property. You may be able to purchase a rider that provides full replacement cost coverage for your personal property. This type of rider is becoming more commonly available.

Another consideration is that many home insurance policies have a separate wind and hail deductible, often called a windstorm deductible. Damage caused by windstorms triggers this special deductible, which can be much higher than your standard deductible. For example, maybe your home insurance policy has a $1,000 deductible for general claims and a 2% windstorm deductible.

A 2% deductible doesn’t sound too bad — until you do the math. A home insured for $300,000 would have a $6,000 windstorm deductible using this formula. The deductible is the part of the claim you pay and some policies may set the windstorm deductible percentage even higher than 2%, so it’s important to review this part of your policy. You may have the option to adjust the windstorm deductible on your policy.

It’s also important to note that your homeowners insurance does not provide coverage for your vehicles, even vehicles kept it a garage or carport. If tornado damage to your vehicles is a concern, consider adding comprehensive coverage to your auto insurance policy.

Average Cost of Tornado Insurance

Because coverage for most of the types of damage caused by tornadoes is covered by most home insurance policies, there really isn’t an average cost specifically for tornado insurance. Instead, insurers look at a number of risk factors as well as claim history, claim trends in the area and the insured value of your home and its contents.

Nationwide, the average cost of home insurance is about $1,100. Homes in areas more commonly affected by tornadoes already pay a premium based on the increased risk from windstorms and may pay more than average. The same is true for homes at risk of hurricanes, wildfires and other risks.

However, there may be some ways to reduce the cost of your coverage and better protect your home in the process. Wind-resistant glass can often result in a discount on your insurance. Wind-resistant roofing materials can help as well as the age of your roof. Homes with newer roofs may earn lower premiums and often receive a higher percentage of coverage for roof damage in a claim.

How to Get Covered

Getting covered for tornado damage is really a process of reviewing the existing coverage on your home or renters insurance policy or on a new home insurance policy to be sure there aren’t any large gaps that create financial exposure.

Because premiums are individualized based on your home and its unique features and risks, binding coverage for home insurance can be a lengthier process than for some other types of insurance. Often, you can get coverage immediately, but the application process includes many detailed questions about your home.

Insurers use the information you provide to calculate a cost to rebuild your home. In most cases, this is the amount your home will be insured for in the event of damage from a covered claim. Before completing your purchase, be sure to review your deductibles for wind and hail, roof coverage and the coverage type and amounts for your personal property.

If tornadoes are a concern, these are all areas of coverage that can cost you more if you have a claim. This can also be a great time to build a home inventory that documents what you own. Save photos of your belongings in your home to a cloud storage service. If a tornado hits, scattering your belongings to the wind, this simple step can help you with your claim.

The Best Tornado Insurance Companies

Choosing the best tornado insurance company often means choosing the best homeowners insurance company or renters insurance company for you. However, there are some key considerations that can make one company a better choice than another.

What to Look For

You’ll want to choose the best company overall, but while paying close attention to policy features that can affect your pocketbook if a tornado damages your home.

Affordable deductibles: Look for a policy that allows you to set the wind damage deductible to a realistic number. The deductible is the part of the claim you pay, so it’s important that this figure fits your budget.

Replacement cost for personal property: Without replacement cost coverage for personal property, it’s possible that you might only be paid pennies on the dollar for some of your belongings in a claim. Look for this option.

Replacement cost roof coverage: This can be rare, but is usually worth the extra cost. A new roof can range from $5,000 up to $15,000. Prorated coverage can mean thousands of dollars in extra out-of-pocket expense in a covered claim. Look for this option as well.

Additional living expenses: It’s easy to underestimate the cost of living elsewhere if you are displaced from your home by tornado damage. In many cases, you can be forced to live elsewhere for several months. Opt for extended coverage for additional living expenses, including housing or hotels, the added cost of eating out and similar related expenses.

Best Overall: Amica

Top-ranked for customer satisfaction in a recent J.D. Power home insurance study, Amica is a top choice if you want comprehensive and affordable coverage for your home. Amica’s Platinum Choice Home policy bundles popular coverage options into an easy-to-understand package.

Dwelling coverage for your home itself provides extended coverage that can protect you against cost overruns. Personal property coverage is offered as replacement cost with select policies, which means your belongings are protected for the full cost of repair or replacement up to your coverage limit.

Homeowners who choose to ensure their vehicles with Amica as well can save up to 15%. Amica also offers the convenient option of purchasing flood insurance to complement your standard home owners insurance coverage.

Amica also tops Benzinga’s lists for the best fire insurance and the best earthquake insurance. Take a look at Benzinga’s full Amica Home Insurance Review.

Farmers

Farmers is actually a worldwide family of companies, which means your Farmers agent may have more coverage options available than some other well-known national insurance brands. This can be especially helpful with difficult-to-insure homes.

Farmers gives you the policy options you need to protect your home against tornado and wind damage. Replacement cost coverage for personal property is available as well as replacement cost coverage for your roof, which can be difficult to find with other insurers.

You’ll also find flexible coverage options available for additional living expenses, which can help cover the cost of temporary housing and other additional living expenses if a covered claim forces you to leave your home temporarily. A claims-free discount and declining deductibles help to keep the overall cost of your policy down if you don’t have a claim.

Farmers Insurance takes top spots in Benzinga’s picks for the best mobile home insurance, the best condo insurance and the best jewelry insurance.

Nationwide

Nationwide has nearly a century of experience insuring families and businesses and is a solid choice for homeowners insurance. Thoughtful policy options make Nationwide a standout when considering home insurance with a focus on potential damage from tornadoes or wind storms.

Nationwide Replacement Cost Plus option can provide an additional 20% above your properties coverage limit if your home needs to be rebuilt due to a covered claim. Nationwide’s Brand New Belongings policy option provides replacement cost coverage for personal property.

Better Roof Replacement, another forward-thinking option available from Nationwide, provides upgraded roofing materials if you have a covered loss that damages your roof. Discounts are also available for newer roofs or based on the type of roof construction.

Nationwide also ranks on Benzinga’s lists for the best legal insurance, the best pet insurance and the best travel trailer insurance companies.

Find Additional Fire Insurance Providers in Your Area
Pro Tip: Compare 2-3 companies to find the best rate

Choose the Best Tornado Insurance Coverage

While most homeowners and renters insurance policies cover damage from tornadoes, specific policy options can help provide more comprehensive protection for your home, fixing potentially expensive gaps in coverage. Your insurance policy is a contract, and that contract dictates the coverage available to you at the time of loss.

It’s common for people to purchase home insurance without fully reviewing coverage details, which can lead to costly surprises if there is a claim in the future. Take the time to review your coverage choices before binding coverage with an insurer, or if you already have coverage, schedule a policy review with your agent to be sure your policy is structured to protect you against damage from tornadoes.

Want to learn more about insurance? Check out Benzinga’s picks for the best umbrella insurance, the best accidental death insurance and the best dental insurance for seniors.