The Associate Press reports that the last month of twisters has already made 2011 the deadliest year regarding tornadoes in over five decades. What may be even more disturbing is that the tornado-affected areas have the highest rate of homes without homeowner’s insurance. Consequently, some of the families who need the most insurance-related assistance do not have it and will have a harder time recouping their losses. While the federal government is able to offer some assistance, the law limits the amount of assistance it can provide to $30,300 per household.
The Most Hazard-Prone
The federal government mandates the purchase of flood insurance in specific zones, but homeowner’s insurance is not. So far, the tornadoes have cost the lives of over 450 individuals and over a billion dollars in damage. The state of Mississippi has the second largest percentage of homes in the U.S. to not carry homeowner’s insurance that covers wind damage and is one of the top five states to have the most tornadoes touch the land in the last five years. Arkansas has the fourth largest percentage of uninsured homes in the U.S. and is number 10 in the list of states that are most tornado-prone. Missouri, Kansas and Oklahoma are among the top 10 states to have the most tornadoes in the country, and have a high percentage of uninsured homes.
Not Insuring a Home ≠ Money Savings
The reason so many homes in the tornado-torn areas of the U.S. do not have homeowner’s insurance is because the owners no longer have a mortgage, so the banks do not require such coverage. When an individual owns a home and no longer has to make mortgage payments, the decision to purchase homeowners insurance is strictly personal. The AP report associates much of the lack of insurance on the high cost to insure older homes and the higher poverty levels. However, as many homeowners found out, going without homeowner’s insurance will not necessarily save you money in the future.
More than 100,000 households and individuals who are victims of the recent tornadoes are waiting to receive FEMA disaster assistance in order to have access to basic needs, temporary shelter and financial assistance for home repairs. A homeowner’s insurance policy helps provide the funds for hotel costs, meals, property replacement, to rebuild a home and general recovery from a storm. Insurance is a matter of risk, and the question begs: Is it worth foregoing the purchase of insurance in order to save money in the present? The decision is strictly personal.
[photo: John Coley]