Richard bill would extend home insurance coverage

The Joplin Tornado exposed some serious flaws in home insurance coverage and those flaws are the target of a bill sponsored by Sen. Ron Richard, R-Joplin. He discusses the bill in his latest report:

The tornado that struck Joplin last May destroyed thousands of homes and damaged countless others. Many people literally lost everything they had. Since then, Joplin and its citizens have worked tirelessly to rebuild. Their continued perseverance in the face of such hardship is admirable and moving. Some people, however, have had difficulty rebuilding their lives because of a loophole in Missouri law regulating how insurance companies calculate payouts on homes that are destroyed by disasters.

Under current law, insurance companies are required to pay out the full value of a homeowner’s insurance policy for both real estate and personal property if the home is a total loss and destroyed by fire. Other disasters, like tornadoes, are not covered.  This means that insurers only have to pay what the home is worth at the time of the loss. When the housing market is down, as it is now, people are getting far less for their homes than what they paid on their insurance policies. They also have to provide an itemized list of all their personal property, and justify the value, to receive their personal property coverage from the insurer.

This is simply not right. People who have lost everything—their home, their possessions, in some cases, their livelihoods—should get the full value of their policy. If a homeowner purchases an insurance policy for $200,000 on their home, they should receive that amount. We already require insurance companies to do this in instances of a house fire. The same protection should be extended to homeowners who’ve lost their homes from any disaster covered under their policy.

Senate Bill 619, which I am sponsoring, would modify the state’s statute to include a wind or tornado disaster, requiring insurance companies pay claimants for the total face value of an insurance policy for the loss of, or damage to, a home from any disaster covered under the policy without claiming a diminished value on the property. 

The Senate Small Business, Insurance and Industry Committee held a hearing on SB 619 this week. Former Missouri State Representative Chuck Surface, of Joplin, testified in favor of the bill. He spoke about how the current policy is particularly hard on seniors.

The people of Joplin and the surrounding areas endured one of the most destructive, deadly tornadoes in the history of our state. As they continue to recover and rebuild, they should not be at the mercy of insurance companies because of a blind spot in state law. My office has received many calls from individuals who are fighting with their insurance companies to get the full value of their policy. These are people who were prudent, who paid month after month, for years, on an insurance policy in case of just such an instance. They deserve better, as do all citizens in Missouri who have dealt with the loss of their home from a disaster. Senate Bill 619 would ensure those homeowners receive a fair deal from their insurance companies. It is my strongest hope that this bill makes it to the governor’s desk.