While insurers responded quickly after the tornado struck Joplin, issuing payments for destroyed homes within weeks, they took longer to resolve contents payouts.
According to Ron Richard, a Missouri state senator who sponsored legislation (SB 619) designed to address the issue, there is a loophole in Missouri law regulating how insurers calculate payouts on homes destroyed in disasters. Currently, insurers are required to pay out the full value of a homeowner’s policy for both real and personal property if the home is a total loss and destroyed by fire. But other disasters like tornadoes aren’t covered by that.
“Insurers only have to pay what the home is worth at the time of the loss. When the housing market is down, as it is now, people are getting far less for their homes than what they paid on their policies,” Richard said.
His legislation also addresses contents claims issues where insureds have no inventory or where it has been destroyed.
“They [insureds] also have to provide an itemized list of all their personal property, and justify the value, to receive their personal property coverage from the insurer,” Richard said. “This is simply not right. People who have lost everything – their home, their possessions, in some cases their livelihoods – should get the full value of their policy.”
The bill proposes to modify the state statute to include wind or tornado disaster, requiring insurers to pay policyholders the total face value of the policy for loss or damage to a home from any disaster covered under the policy without claiming diminished value on the property.
Larry Potalivo, a catastrophe adjuster with Crawford & Co., recommends policyholders keep an inventory list in a safe deposit box to avoid content claims delays.
Missouri’s insurance director is reviewing the bill.
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