Tornadoes hit parts of Alabama, Arkansas, Georgia, Mississippi, Tennessee and Virginia and affected other areas throughout the South and East Coast. In total, 358 tornadoes were confirmed by the National Weather Service in 21 states from Texas to New York. April 2 was among the most prolific and destructive tornado days in U.S. history ,with a record 208 tornadoes touching down that day.
In Georgia, the governor declared a state of emergency in 16 counties. In total, 15 tornadoes tracked across the Peachtree City forecast area, which includes most of north and central Georgia.
Stores, restaurants, homes, schools and many other buildings were reduced to rubble.
Just one year later, many homes have been rebuilt. Businesses reopened and students are back in school. Much of the rebuilding and making families whole again has been achieved with insurance payouts.
Now the conversation has turned to how last year’s storms and the steadily increasing risk of more tornadoes affects insurance rates. Insurers take into account many cost increases, but it takes many years of weather events as rates structures are developed because weather is cyclical and these cycles must be considered over time. That means often more than five to 10 years.
Businesses increase prices when the cost of doing business rises. Ask insurers and builders about the costs related to replacing hundreds or even thousands of homes at one time.
Rebuilding a community means first comes the demolition and debris removal costs. Then the cost of building materials continues to rise, not fall. Consider that the market price of a property is not related to the cost to rebuild. This is particularly important since the housing market has declined in recent years. The cost of building a home actually rose by 45 percent from the start of 2001 through the end of 2011.
While the home is being rebuilt, homeowners insurance usually reimburses policyholders for additional living expenses as provided by their policy.
Many of these devastated homeowners and renters also require repair or replacement of vehicles damaged by these storms. In addition, insurers pay out money for replacement of belongings lost by homeowners and renters in tornadoes or other events.
These images will stay with us for many years. But while recalling the devastating damage, we are grateful for these new communities that have risen out of the damage from the storms. Insurers are at the core of rebuilding these communities and the lives of their inhabitants.