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Tornadoes

A tornado is a violently rotating column of air that extends from a thunderstorm and comes into contact with the ground, according to the National Oceanic and Atmospheric Administration (NOAA). In an average year about 1,000 tornadoes are reported nationwide, according to NOAA. Tornado intensity is measured by the enhanced Fujita (EF) scale. The scale rates tornadoes on a scale of 0 through 5, based on the amount and type of wind damage. It incorporates 28 different damage indicators, based on damage to a wide variety of structures ranging from trees to shopping malls.

The U.S. experiences more tornadoes than any other country in the world, according to a 2013 report by Lloyd’s of London. (See Executive Summary, page 4 of Tornadoes a Rising Risk? for additional findings and statistics.)

The Fujita Scale For Tornadoes

(1) Original scale: wind speeds represent fastest estimated speeds over one quarter of a mile.
(2) Enhanced scale: wind speeds represent maximum 3-second gusts.

Source: U.S. Department of Commerce, National Oceanic and Atmospheric Administration.

Tornadoes accounted for 40 percent of inflation-adjusted insured catastrophe losses from 1997 to 2016, according to Property Claim Services (PCS®), a Verisk Analytics® business. In 2018 insured losses from U.S. tornadoes and thunderstorms totaled $14.1 billion, down from $18 billion in 2017, according to Munich Re. The number of tornadoes fell to 1,124 in 2018 from 1,429 in 2017, according to the National Oceanic and Atmospheric Administration (NOAA). The 2017 total was the highest since 2011, when there were 1,691 tornadoes, including two spring events that resulted in more than $14 billion in losses when they occurred. There were 10 direct fatalities from tornadoes in 2018, compared with 35 in 2017, according to NOAA. May was the top month for tornadoes in 2018, with 155 twisters. The United States experiences more tornadoes than any other country, according to a 2013 report by Lloyd’s of London.

Preliminary NOAA reports show there were 1,429 tornadoes in 2019 through early November compared to 1,060 for the same period in 2018. Tornadoes killed 38 people from January to November 2019, compared with nine people for the same period in 2018.

On March 3, 2019 a tornado struck southeast Alabama as part of a severe storm system that resulted in catastrophic damage in Alabama, Georgia, South Carolina and Florida. At least 23 people were killed in the March 3 tornado in Lee County, Alabama. In Beauregard, Alabama, the tornado left a half-mile wide path of destruction. The National Weather Service said that the tornado was F4 strength with top winds of 170 miles per hour. The tornado storm system of March 3 was the deadliest outbreak in the United States since a system in Arkansas and Mississippi in April 2014 killed 35 people.

There were 303 tornadoes in April which caused seven deaths: two each in Texas, Louisiana and Oklahoma and one in Mississippi. There were 556 tornadoes recorded in May. These tornadoes claimed another seven lives, including three in Missouri, two in Oklahoma and one each in Iowa and Ohio. Tornadoes from May 26 to May 29 in 13 states caused $2.8 billion in losses, according to the Property Claim Services unit of ISO. On October 20 and 21, a severe thunderstorm outbreak ripped through Texas, Oklahoma, Missouri, Arkansas, Tennessee and Louisiana, and produced several tornadoes including an EF-3 affecting the Dallas, Texas area. Aon said insured losses may reach the hundreds of million dollars.

Insured Losses

The United States experiences more tornadoes than any other country. Tornadoes accounted for 39.9 percent of insured catastrophe losses from 1997 to 2016, according to Verisk’s Property Claim Services (PCS). A March 2017 report by Willis Re found that the average annual loss from severe convective storms is $11.23 billion (in 2016 dollars) compared to $11.28 billion from hurricanes, based on PCS data. In 2018, insured losses from U.S. tornadoes/thunderstorms totaled $14.1 billion, up from $18.2 billion in 2017, according to Munich RE. The National Oceanic and Atmospheric Administration notes that tornadoes can happen any time of year. The costliest U.S. catastrophe involving tornadoes, based on insured losses, occurred in April 2011. It hit Tuscaloosa, Alabama, and other areas, and cost $8.2 billion in insured damages (in 2018 dollars). The second costliest catastrophe involving tornadoes, based on insured losses, struck Joplin, Missouri, and other locations in May 2011. The catastrophe cost $7.8 billion in insured losses in 2018 dollars. (See chart below.) The National Weather Service posts updated information on tornadoes.

Courtesy of iii.org

Accidents happen—and if they happen to people you’ve hired to come into your home or onto your property to work, you’re financially liable. It makes sense to understand how you’re already covered and when to further insure household help.

Courtesy of iii.org

One might think that family-owned and operated businesses would be relatively immune from employee lawsuits, but that’s not the case according to a recent Gen Re article.

The reasons family-owned businesses get sued include: most family owned businesses employ at least one non-relative; the non-relative is likely to be first to be fired when the business is struggling; and family members are reluctant to discipline each other for bad workplace behavior, especially if the family patriarch is the one misbehaving.

The article gives several examples of lawsuits against family businesses and the awards paid out, concluding that a family-owned business would benefit from including employment practices liability insurance (EPLI) as a part of its insurance package.

According to GenRe:

These workplace scenarios and settlement amounts mirror those we see for all businesses. Discrimination and sexual harassment – as well as wrongful termination, violations of privacy and other employment wrongdoing – are not limited to any type, place or structure of business.

When it’s time to evaluate insurance for the family business, be sure that Employment Practices Liability insurance is not overlooked. The chances of needing EPLI protection are no less than for a slip and fall or fire loss. It’s all relative.

Courtesy of iii.org

You may have read the recent story featured in the I.I.I. Daily about raccoon damage and homeowners insurance. The gist: raccoons got into a house and caused $80,000 worth of damage. The homeowners were surprised to learn that their insurance wouldn’t cover any of it.

So what’s the deal with animal damage and insurance?

Homeowners insurance

Let’s start with the easy stuff. If your dog Fido rips through your couch or pees all over the wall, you’re out of luck. Standard homeowners policies won’t cover any damage to your house or personal property caused by a pet. And”pet” is a pretty broad term. Doesn’t matter if it’s a Shih Tzu or a Clydesdale horse, pets are any animal you own.

What about animals that aren’t pets, like deer or birds or – God forbid – rats? That’s where things get interesting.

Building damage: You probably aren’t covered for any damage to the building caused by birds, rodents, insects, or vermin. There also probably won’t be coverage for any nesting or infestation. Insurance policies can vary widely, however, so make sure you ask your agent what is and isn’t considered a rodent or vermin (some insurers will say raccoons are vermin, some will say they’re not). The specific details of your policy will determine your coverage.

Damage to the building from other wild animals could be covered, though. If a moose runs through the sliding door to your deck, the damaged door would be covered.

Personal property damage: Unfortunately, your personal property is probably not covered no matter what kind of animal does the damaging. If a moose runs through your sliding door and wreaks havoc on grandma’s china, then you’re covered for damage to the door, but not the china.

Liability: You go to your friend’s house and bring Fido for a dog playdate. Fido then rips through your friend’s couch. Are you covered? Yes. Homeowners liability protection will cover the damage to other people’s property caused by your pets. Just not your property. Friendship saved.

Personal auto insurance

A squirrel chews through the wiring in your car. Fido dents your door chasing after a squirrel. A moose rams your car in a fit of rage, smashing the windshield. (Why do I keep thinking of moose scenarios?)

Does personal auto insurance cover animal damage? Yes, if you have optional comprehensive coverage. If you only have collision coverage, then you’re not covered.

Collision only covers damage when a car overturns or hits another car or object. Comprehensive covers…more or less everything else: damage from falling objects, fire, explosions – and birds and animals.

So if you paid the extra premium for comprehensive coverage (like most Americans do), then you’re covered for damage from chewing squirrels, incautious Fidos, and rampaging moose (meese?).

Courtesy of iii.org

Creating and updating an inventory of your personal possessions is one of the best ways to make the most of your homeowners or renters insurance, and makes filing a claim easier and more efficient.

A home inventory is simply a list of your personal possessions along with their estimated financial value. You can create a home inventory in a simple, low-tech manner by writing down everything in a notebook and keeping receipts in a folder. Or you can take advantage of technology and use a digital camera or smart phone or app to make your record.

No matter how you choose to do it, the important thing is to take action. An up-to-date home inventory will:

1. Help you purchase the right amount and type of insurance. Having an accurate list of all your possessions helps you to have a more productive conversation with your insurance professional when making decisions about homeowners or renters insurance coverage. After all, if you don’t know what you have, how can you insure it adequately?
2. Make filing a claim as simple as possible. Most people cannot remember what they had for breakfast much less recall the contents of their attic, kitchen cabinets or downstairs closet after a fire, storm or other catastrophe. Disasters are scary and stressful, which can make trying to list damaged property for a claims form even more challenging. Having your belongings already documented in your home inventory can be a huge relief at times like these.
3. Substantiate financial losses for tax purposes or when applying for financial assistance. Following a catastrophe, the only way to determine whether you qualify for a tax break or disaster assistance is to substantiate your financial losses. A well-organized home inventory can be an extremely useful tool in this process.

Next steps: Use these tips to get started on your home inventory.