National Oceanic and Atmospheric Administration (October 8, 2021)
2021 has now tallied the most billion-dollar disasters in the U.S. in a single year, with 18. This surpasses just last year’s count of 17 by the end of September and marks the 7th consecutive year with ten or more billion dollar disasters.
This tally does not include the tornadoes that ripped across the central U.S. on December 10 & 11 which, according to an article published in the Insurance Journal on December 13, 2021, could be the costliest outbreak on record. There is no doubt that natural disasters in the U.S. have become more frequent and more severe.
SIGNIFICANT FACTS
The number of homeowners who suffer unreimbursed losses due to federally declared disasters keeps increasing. Virtually every victim suffers some degree of unreimbursed loss. Here are some reasons why:
· 40% of FEMA disaster assistance applications are denied.
· 30% of private insurance claims following a disaster are denied.
· A survey by Simple Dollar found that while environmental changes are increasing the severity and frequency of natural disasters, just 47% of Americans have home insurance. Also, almost 42% of homeowners wouldn’t pay more to insure their homes due to climate change.
· According to the insurance industry, 60% of all homes in the U.S. are under-insured by 20% or more.
It is probable that many of these recent tornado victims have casualty insurance that will help offset their loses. However, since we know 60% of all home are uninsured by 20% or more, and most policies are subject to a deductible, nearly all homeowners will suffer some unreimbursed loss. They will qualify to file claims under the IRS casualty loss program.
There is an important distinction to be made here: These victims did not lose the replacement cost of their homes – they lost the “market value” of their homes which likely exceeds replacement value by a significant amount. It is this loss in market value that Disaster Relief computes and which is the basis for claims under the IRS casualty loss program.