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Daily Real Estate News  |  April 29, 2011  |   After Storms, Home Owners May Struggle to Rebuild
A powerful storm system on Wednesday ripped through Southern states, wiping out entire towns and killing at least 209 people so far (the death toll is expected to rise).

Many home owners in Alabama, Mississippi, Tennessee, Georgia, Oklahoma, and Virginia are finding their homes torn apart, after 137 tornadoes were reported around the regions.

But as home owners look to rebuild, they may find a shortfall in adequate home insurance coverage to cover all of the damages, the USA Today reports.

Most home owner insurance polices provide coverage for tornadoes, and home owners do not have to buy extra coverage like they do for earthquakes or floods. However, research has shown that despite 96 percent of people having homeowners insurance, 64 percent of U.S. homes are undervalued for insurance purposes, according to a 2008 research by Marshall & Swift.

While home values have decreased in many areas, many home owners did not think they still needed to upgrade their insurance. However, building costs in many areas have gone up, insurance experts note.

Renters also may struggle. Only 43 percent of renters tend to have renter’s insurance, according to the Insurance Research Council.

In states declared disaster areas, the uninsured or under-insured could be eligible for federal aid, which is capped at about $30,000, but average payments tend to be much less.

Source: “Homeowners Face Shortfall in Coverage From Tornadoes; Insurance Policies May not Reimburse Full Costs,” USA Today (April 29, 2011)

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