Insurance Companies Mobilize after Midwest Tornadoes Cause an Estimated $1 Billion in Damage
The deadly tornadoes that swept through the Midwest last weekend are expected to become the insurance industry's first billion-dollar severe weather event to ever take place in November – and they've sent insurance companies scrambling to assess the damage.
Matthew Neilsen, director and meterologist for the risk management firm RMS, says the November 17 outbreak of tornadoes was an anomaly, and part of 2013's unusual weather patterns.
But according to Aon Benfield, a reinsurance intermediary and a division of Aon plc (NYSE: AON), five severe weather events in 2013 have caused at least $1 billion in damage. That would make this year the third most-costly in terms of weather-related damage, after 2011 and 2012.
American Family Insurance, meanwhile, says it has deployed 40 company representatives in hard-hit central Illinois – where they have processed over 575 claims, with that number expected to rise to around 1,000 as the assessments continue.
"In a situation like this it's all hands on deck," Steve Witmer, the company's media relations manager, told the ChillicotheTimes-Bulletin.
According to the Insurance Information Institute, the most expensive tornado disasters in the U.S. were the storms that hit Tuscaloosa, Ala. and nearby areas in April of 2011, causing $7.4 billion in insured damages – and the storms that devastated the Joplin, Mo. region in May of that year – blamed for $7 billion in insured costs.
The I.I.I notes most standard homeowners and business policies cover wind damage caused by tornadoes – while many homeowners policies provide Additional Living Expense coverage to pay for the cost of living away from an uninhabitable home. Tornado damage to cars, meanwhile, is usually covered on the optional, comprehensive coverage part of a typical auto insurance policy.
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