Rising Insurance Costs in Tornado Alley
Insurance premiums are skyrocketing in states across Tornado Alley, with Kentucky seeing a 35% increase in recent years, according to the Consumer Federation of America. Similar trends are observed in Nebraska (35%), Arkansas (34%), Minnesota (32%), and Texas, Colorado, and Iowa (27%).
Industry experts attribute the rising costs not to tornadoes, but to hailstorms that cause damage over much larger areas. “Even though tornadoes are a much more significant threat to life, most of the insured damages associated with severe weather come from hail,” says Scott St. George, head of weather and climate research at insurance broker WTW. Hailstones can break windows, tear off siding, and damage roofing materials, accounting for 50-80% of homeowner insurance claims from severe convective storms.
Ben Keys, a real estate and finance professor at The Wharton School, notes that hail has become an increasing contributor to insurance claims due to its frequency and severity. This trend is part of a broader national pattern, with average insurance premiums rising 24% in recent years.
The insurance industry is responding by raising rates and adjusting coverage. “Insurers are going to follow the same playbook” they’ve used for other threats, says David Marlett of Appalachian State University. This includes scaling back coverage on roofs and increasing rates to match the growing risk.
Some states offer insurance discounts for homeowners who install fortified roofs, but these discounts are often small, making the investment less appealing. According to Jeremy Porter of First Street, “For the average homeowner, buying a $15,000 roof versus getting an $80 drop in your insurance just isn’t worth it.”
While fortified roofs can offer protection against hail, they are less effective against powerful tornadoes. As Marlett notes, “At some point with a tornado, you simply can’t build a structure that’s going to withstand that.”
