Will Your Auto Insurance Weather The Storm?
The truth is, the most important factor in deciding how a person's insurance rates will fare after a natural disaster is the region of the country where they live. The same storm might cause a higher or lower auto insurance rate in different areas, and that's what this post is all about.
So if you're curious about your own rates — or figure you should know what to expect if you plan on moving to an area prone to storms — keep reading! We'll walk through each region and share their unique story. You'll soon be able to gauge whether it might be more affordable for you.
How We Determined Your State's Auto Insurance Rates After a Storm –
We'll walk through each region and share their unique story. You'll soon be able to gauge whether it might be more affordable for you.
The Basics On Natural Disasters & Their Auto Insurance Impacts –
Whether you live in Florida, California or out in the Midwest, natural disasters can occur during any season of the year. A hurricane might strike in the summer months, while an ice storm could arrive during wintertime. Whatever the weather brings, it will certainly impact your auto insurance rates after a disaster strikes.
Let's take a look at some of the most common natural disasters, and how they might affect your rates:
Hurricanes – Tropical storms are some of the strongest to hit any part of the country. They're known for bringing high winds, damaging rains and storm surges that can flood portions of coastal communities. For those reasons, hurricanes are one of the most expensive natural disasters in terms of man hours and rebuilding costs. So hurricane damage can be devastating, financially-speaking. But for auto insurers, it's a costly problem that has been largely unavoidable until recently. That's because insurers have traditionally included hurricane deductibles in their policy language. But many states have made it illegal to have a hurricane deductible — and this is great news for the insured.
In states that have enacted these reforms, hurricane deductibles are no longer permitted. And that's a pretty big deal because it means more people can afford to rebuild faster after a tropical storm or hurricane strikes. This translates to higher auto insurance rates in those states when natural disasters occur. However, even though the damage costs might be higher than usual for insurers, the payouts will still be there for policyholders living in disaster-vulnerable areas!
Tornadoes – Tornado season lasts all year long, but they are most likely to occur in March, April and May. The Midwest is prone to the strongest tornadoes, and they have the potential to cause major damage and destruction – which is why they're so costly for insurance companies to cover. The average auto insurance cost after a tornado can vary greatly, depending on where you live.
The most severe weather events are generally covered by underwriters using the Modified Catastrophe Model. However, there are also other factors that impact an insurance company's ability to say that it is financially feasible for them to pay out claims after a tornado strikes.
For example, some states have state laws that mandate coverage of certain types of damage before they'll help pay for storm damage repair costs. It's not clear if this is the case for every state, but insurers are sensitive to these rules.
So if your state has strict laws that limit how much insurers can spend to cover damage after a tornado strikes, you might see your rates go up after a natural disaster occurs. But watch out because tightening laws like this might make it nearly impossible for an insurer to pay out claims after disasters occur.
Floods – Political pundits will often use natural disasters as political ammunition in a bid to sway voters' opinions on policies and politics, but one thing they'll almost never mention: Floods can happen at any point of the year. They're not just a risk during the warmer months.
However, there is a pattern to floods in that they tend to occur more often in the spring and summer months. Sadly, this means home and business owners will see their auto insurance rates go up after flooding strikes. Flooding is often classified as a "catastrophe," which is why natural disasters are handled by catastrophe models. But policies vary depending on where you live – whether it's an area prone to flooding or not – so if you want to know what your rates will look like after a disaster hits, you'll need to speak with your agent about how your policy works before you buy it.
Winter Storms & Ice – While tropical storms, hurricanes and tornadoes are the most devastating natural disasters we deal with here in the U.S., other severe weather events can occur. Winter storms are among the most costly to auto insurers because they typically cause significant amounts of damage.
The Great Blizzard of 1978 is a great example. The East Coast was hit by several days of heavy snow and ice, which was preceded by heavy rain that turned into sleet and freezing rain. The storm caused nearly 300 deaths due to car accidents as well as heart attacks, falls and exposure while walking in the blizzard-like conditions. But another major impact was that it caused over $850 million in damage to homes and auto insurers.
We've also seen some major storms and ice cover recently, like the windstorms that ripped through the South, Midwest and Northeast in 2011. That year saw several significant winter blizzards, including one that struck the East Coast – called "Snowmageddon" – in February. And then there were the two major snowstorms that hit the same region later that year: The October Surprise and Winter Storm Alfred. These storms cost insurers a lot of money, as homeowners filed more than 1 million auto damage claims during the blizzards.
Like hurricanes, tornadoes and floods, winter storm claims costs — especially after the first three to six months of the year — can be quite expensive for insurers. But thankfully, winter storms are becoming less frequent in recent years. As a direct result of that trend, your rates won't likely go up as much as before regarding winter storms.
Hurricanes – Hurricanes are among the most damaging natural disasters that occur in the United States. They cost thousands of lives and billions in property damage each year. And because they affect so many people all across our country, they have a huge impact on insurance rates after a catastrophe strikes.
Conclusion: We've covered a lot of different storms in this post, but you might still have more questions on the topic at hand. So consider joining us as a member of our community and participating in our forums! There are a lot of resources that will help you figure out exactly how your auto insurance works after a natural disaster like flooding, tornadoes and hurricanes strike.
And as always, if you'd like to learn more about what Hurricane Irma has done to Florida auto insurance rates, please visit our Florida driving safety page. We'll be updating it frequently with the latest information on the state's losses from this recent storm.