Higher insurance premiums may follow in storms' wake

The full cost of the deadly storms of May 4 may not be brought home to most Missourians until they renew their homeowners insurance next year.

Last year, the average insured Missourian faced a nearly 40 percent increase in homeowners insurance rates, said Randy McConnell, communications director for the Missouri Department of Insurance. The dramatic increase was, in part, the result of $1 billion in claims related to the April 2001 hailstorm in St. Louis County.

Initial estimates point to at least $200 million in insured losses related to the May 4 tornado and storm damage, McConnell said.

"That doesn't include a lot of the damage in Pierce City in buildings that were old and not insured. That doesn't include losses to public facilities like fire stations and police stations that were destroyed, or anything to do with clean-up costs that local governments would bear," he said.

And the damage is widespread.

"We have at least 17 communities with major damage across the state, some of them hundreds of miles apart," McConnell said.

On the positive side, the impact of the storm could pressure legislators to pass bills to protect policyholders whose property suffers weather-related damage.

MDI had hoped to see Senate Bill 539 become law this year. "If we were able to get legislation passed this year, it would not have been an issue," McConnell said.

SB 539, the Homeowners Fair Play Act, would have prohibited companies from using weather-related claims to penalize policyholders through nonrenewal or surcharges, he said.

The bill didn't make it to the calendar this session, but McConnell said the impact of the May 4 storms could make the bill more of a priority next year.

Future worries

Meanwhile, policyholders could face nonrenewal in the future because of storm claims made now. Last year there were approximately 22,000 nonrenewals of homeowner's coverage. McConnell said a good portion of those rejected had previously filed claims.

Multiple claims, especially minor ones, make it more likely that a policy would not be renewed, McConnell said.

However, that risk must be weighed against the damage incurred.

Despite the impact a claim may have on a policyholder's future, McConnell said, homeowners should file a claim when there is substantial damage.

"If you have serious damage in an instance like this, your first obligation to yourself and your family is to repair your home. I'm not talking about $500 claims. If the second floor is gone, if the roof is gone, if the house is gone file a claim; that's what insurance is for," McConnell said.

However, if damage is fairly minor, a claim may be a mistake.

McConnell gave an example. If a window is blown out, "You may want to have second thoughts about filing that claim because it can place your continued coverage after the policy expires in jeopardy."

If policyholders do have problems with renewal in the future, the Department of Insurance can provide some help, McConnell said, but judicious filing of claims is up to the policyholder.

Customer service

Insurance companies who are dealing with major claims do have a responsibility to respond quickly, McConnell. said.

"When you file a claim, they have 10 days to respond, to acknowledge it." The claim must be investigated within 30 days and the company then has 15 days to make payments, he said.

"Now, if they need additional information the law provides for those deadlines to be extended. But it's not the kind of thing where companies can sit on your claim and not do anything for long periods of time. The law just doesn't allow that."