ATLANTA (AP) — Many of the states hammered by what’s already the deadliest
year for tornadoes in more than half a century have among the nation’s
highest rates of homes without hazard insurance despite being among the most
twister-prone, data analyzed by The Associated Press shows.
That means the regions that most need the insurance are often the exact
places that don’t have much of it. It also means many tornado victims may
have a hard time getting compensated for their losses, putting more pressure
on the federal government to help even though its assistance is limited by
With more than 450 deaths and billions of dollars in damage in the past
month alone, regulators are calling for more education about the importance
of homeowners insurance and further efforts to make it affordable and
available to all. But whether to buy it is still considered a personal
choice and there’s no push to mandate it federally.
The fallout is on stark display in Mississippi and Arkansas, two of seven
Southern states battered last month by twisters. Mississippi ranks second in
the nation for the percentage of homes without insurance covering wind
damage yet fourth on the list of states that have had the most tornadoes
touch down in the past five years. Arkansas ranks fourth for uninsured homes
and 10th for being tornado prone, according to the AP’s analysis.
Missouri, site of Sunday’s tornado outbreak with at least 126 dead, falls
somewhere in the middle on hazard insurance despite being the fourth most
tornado-prone state. Kansas and Oklahoma, the sites of deadly tornadoes
Tuesday, also fall in the middle and rank No. 2 and No. 6 on the list of
most tornado-prone states.
States with the highest rates of uninsured homeowners also tend to have a
higher incidence of homes without mortgages, meaning owners don’t have to
answer to banks requiring coverage. The uninsured can turn to aid groups and
the federal government for relief — but often not for full compensation.
Poverty and an abundance of older homes that can be difficult to insure
contribute to high rates of no insurance. In tough economic times, the
temptation to forgo insurance is real.
Tammy and Kevin Cudy of Joplin, Mo., dropped their homeowner’s policy, and
its $50-a-month premiums, last August after Kevin lost his construction job.
They considered reinstating their policy within the past week but said they
were unable to reach their insurance agent by telephone.
And then the deadliest single tornado in nearly six decades demolished their
five-bedroom home Sunday.
“That’s why I’m kicking myself right now,” said Tammy Cudy, 47. “The fact
that we were thinking about it, that we needed to work our budget around it,
it just makes you kind of heart-sick at this point.”
Many people don’t qualify for insurance if their homes are in high-risk
areas, or they have trouble affording a policy to cover wind damage because
of high costs associated with home value, aging construction and building
codes, Arkansas Insurance Commissioner Jay Bradford said.
“The loss ratios on those houses that are insured are generally pretty
high,” Bradford said. “They don’t have central heat and air. They are older
homes. Sometimes, the plumbing and wiring are not up to standard. The rates
are higher, and the coverage is limited.”
Bradford is among regulators calling for more education and strategies to
make insurance more affordable. Yet he opposes a mandate, as do two
lawmakers from tornado zones contacted by phone: Rep. Mike Ross, an Arkansas
Democrat, and Rep. Alan Nunnelee, a Mississippi Republican.
Nancy and Homer Davis weren’t protected for the worst.
Tight finances kept them from buying a policy on the 80-foot-by-14-foot
trailer they purchased eight years ago for $10,000. Homer Davis is on
disability and Nancy Davis works part-time at a Lowe’s home improvement
store. One of last month’s twisters lifted their trailer off the ground near
Pheba, Miss., smashed it against trees and disgorged their household
belongings into a ditch.
“I’m trying to figure out, ‘Where does my money go?’ He’s on disability and
I’m working part-time,” said Davis, 51. “It’s just trying to figure out
what’s the best way to spend your money. You say to yourself, ‘As soon as
I’m ready, I’m going to get insurance on the house.’”
Nationally, roughly 4 percent of owner-occupied homes lack homeowners, or
hazard, insurance, according to the latest industry estimates. But the
numbers vary substantially by region.
The South has the highest rate of homes without hazard insurance, at 17.4
percent, according to the AP analysis. This is followed by the Northeast at
12.2 percent, the Midwest at 8.4 percent and the West at 3.3 percent.
The highest death toll from tornadoes in the past month was in Alabama,
which is at the national average for homes without insurance and ranks third
for frequency of tornadoes. North Dakota tops the uninsured list and ranks
16th on the tornado-prone list.
Louisiana, another state hit by the April 27 tornado outbreak in the South,
ranks 11th in both categories.
The AP analyzed data compiled by the Insurance Information Institute and the
U.S. Census Bureau. AP relied on 2008 figures because those were the most
recent for which comparisons could be made, and it’s unlikely the numbers
would have fluctuated much in the past three years, said industry expert
Robert P. Hartwig.
About 30 percent of owner-occupied homes in Arkansas and Mississippi lack
hazard insurance policies, according to the AP analysis, which reviewed data
from all 50 states except Florida, where data was incomplete. In Louisiana,
about 17 percent are uninsured. The rate is roughly 10.5 percent in
Missouri. Alabama, Georgia, Kentucky and Tennessee all are close to the
national average of 4 percent.
Some of the states hit by last month’s tornadoes have average insurance
premiums well above the national average of $791 a year. Louisiana’s average
annual premium is $1,155 and Mississippi’s is $980. Alabama’s average
premium is $845, as is Minnesota’s. Arkansas’ and Missouri’s are $788,
roughly at the national average.
By law, the Federal Emergency Management Agency can provide up to $30,300 in
grants for home repairs, rental assistance and other disaster-related losses
in presidentially declared disaster areas. But that may not cover the cost
to rebuild. Insured homeowners can still qualify for FEMA aid, but the
assistance is reduced by the amount of the insurance settlement.
Tom and Tammy Priola hope FEMA covers the cost of rebuilding a new house
after they lost their 100-year-old home in suburban Birmingham to the
tornadoes. Their house is valued at $73,000, more than double FEMA’s limit.
Inspectors had deemed it too old and risky for coverage so they never
purchased homeowners’ insurance.
“It’s so hard to make plans that you can really follow right now,” said
Priola, an electrician. “We’re in a daze kind of deal.”
Homeowners also may be eligible for low-interest loans from the Small
Business Administration. Unlike the FEMA program, the SBA money must be
repaid, and if the loan is over a certain amount the agency will take a lien
against the property until the money is repaid.
FEMA has already registered more than 100,000 individuals and families in
the tornado-affected states for assistance and approved tens of millions of
dollars for individual assistance to cover temporary housing, home repairs
and other needs.
According to Census data, Mississippi and Arkansas have higher-than-usual
rates of homes without mortgages — about 41 percent of owner-occupied homes
in Arkansas and 43 percent in Mississippi. The national average is under a
third of all owner-occupied homes. Missouri stands at about the national
average. In many cases, homeowners have inherited their homes and don’t need
a mortgage which would require insurance, said Larry Cox, a University of
Mississippi professor who heads the school’s insurance and risk management
“It’s come down from grandparents, great grandparents, and they never
bothered to insure it,” Cox said. He added, “I think the general public
finds insurance complex, confusing, something they don’t want to think