Tornado Alley is top of the heap when it comes to homeowners’ insurance costs.
A new report by industry aggregator HomeownersInsurance.com ranked Oklahoma as having the most expensive annual premiums. Neighboring Kansas was No. 2, while Texas, Arkansas and Missouri all ranked in the top 10.
Tulsa resident Kristie Ferguson’s family, like many, takes a solid financial hit every year with premiums around $3,000 and more. But they also suffered another kind of shock when a wind storm last year toppled a neighbor’s tree and destroyed the garage of their midtown residence.
“We’re paying a very pretty penny, and the coverage did go up” from last year, Ferguson said Thursday, but added, “With all the damage everywhere, it’s worth having it in there.”
Repairs to their property are ongoing, but the Fergusons are hardly alone and far from the worst hit. Oklahoma recorded 79 tornadoes last year, second highest in the nation, including the May 20 twister in Moore that killed 20 people and caused more than $1 billion in damage.
HomeownersInsurance.com says the high insurance rates are obviously tied to Oklahoma’s stormy nature.
“That’s what I would attribute it to,” said Carrie Van Brunt-Wiley, a spokeswoman for the website. “That whole Tornado Alley — we’re seeing premiums increase pretty regularly over last year.”
HomeownersInsurance.com estimated that Oklahoma homeowners pay about $1,564 annually on premiums. The number is based on the average policy premium sold by the companies represented on the website in the first quarter.
The second highest premiums were in Kansas, like Oklahoma a state prone to tornado activity.
Homeowners in Kansas paid an average of $1,144 per year to insure their homes.
The lowest premiums were in Oregon at $419 per year. The U.S. average was $810, up less than 1 percent from the fourth quarter of 2013.
Insurance carriers in the HomeownersInsurance.com survey included Safeco, Liberty Mutual, Travelers, The Hartford, MetLife, Progressive, ASI and Foremost.
The report covered data from more than 60,000 policies nationwide, according to the website.
One of the carriers, Liberty Mutual, has been midtown resident Ferguson’s insurer through the storm repairs. She praised the company’s prompt action, noting that her family has received more than $44,000 to fund the fixes.
The Fergusons’ out-of-pocket expenses, however, has been close to $19,000 due to prorating on the aging roof and other caveats in the policy.
“We had a lot of roof damage and have to take into account the age of the roof,” she said. “And it got us to questioning (the presence of) a lot of trees” in their picturesque neighborhood.
Some may blame it on the May tornadoes, but Oklahoma maintained its frontrunner status through most of 2013, according to HomeownersInsurance.com’s quarterly reports. Only Louisiana broke Oklahoma’s hold — it was rated the most expensive state for premiums in the second quarter.
Oklahoma Insurance Commissioner John Doak noted that insurance companies must be OK with Oklahoma because very few have gone insolvent covering the state through major tornados and other disasters over the years.
“For a state with a noncoastal border, we have most amount of catastrophic events” with hailstorms, floods, wildfires and tornadoes, he said. Even so, state regulators have tried to maintain an open-market policy that encourages insurers to take chances in the state.
“They’re still here and they’re still viable,” Doak said. “Consumers expect that when they have major losses to be paid and that companies have the ability to pay them.”
Doak encouraged insurance customers to ask lots of questions and test the market every few years to see if competitors can offer better rates.
More importantly, he added, homeowners should find out specifically what their policy covers, and to what extent.
“Walk into your agent’s office and say, ‘Give me an example if all I had left tomorrow morning was a driveway,’” he said.
“I can tell you with all degree of certainly that the insurance industry has responded to Oklahoma consumers in a very effective manner in handling and paying claims in an efficient way,” Doak said.
Ferguson takes the good and the bad with her family’s damage control. The premiums are extremely high to make sure you get back replacement costs rather just the current value of the property that is lost, which may be decades old.
All in all, though, she believes the high premiums are worth it.
“You have to have that,” Ferguson said. “We’re willing to take that risk because Oklahoma’s got so many crazy storms. You never know when a tree’s going to hit you.”