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Paying for Tornado Insurance in Texas

You can pay for your tornado insurance premiums through different methods. The most common modes of payment include:

  • Sending in a paper check,

  • ACH (Automated Clearing House)

  • Escrow

  • Premium Finance

You can also make payments using cash, check, money order, or using credit cards. Note that payments made through credit (credit cards and premium financing) usually come with extra fees.

Who Pays for Tornado Insurance?

The insured policyholder is responsible for the payment of premiums for tornado insurance. The policyholder could be an individual or a corporate body.

What are the Payment Options for Tornado Insurance?

In Texas, your tornado insurance payment options depend on the type of policy being purchased, but one thing stays constant regardless of the insured - paying upfront is always the lowest cost solution, if you can afford the lump-sum payment:

  • Residential insurance with wind damage protection:

    • Homeowners insurance is usually paid via an escrow account if there is an active mortgage on the dwelling. If the home is paid off, the owner may pay annually or monthly, based on the payment options and extra processing fees the insurer offers.

    • Renters insurance is usually paid monthly, via check, card, or the insurer’s app.

  • Commercial insurance with wind damage protection is usually paid in full via a company check or financed through a third party finance company.

Can I Finance the Tornado Insurance Cost?

Yes. You can finance your tornado insurance using premium financing in Texas. Although residential tornado insurance that is contained in a standard home insurance policy or renters policy can be paid monthly (usually without extra charges), commercial coverage is most frequently paid fully, once a year. If a business intends to make smaller payments over the course of the year, it will need to use the services of a premium financing company. The company will pay the annual cost of your tornado insurance while the business will make monthly payments to the company. These payments will include an interest based on an agreed payment plan with an extra cost that is typically between 7% -12% per annum. You should speak to your insurance agent to learn more about the premium financing options that are available to you.

How Often is Tornado Insurance Paid?

Depending on the tornado insurance coverage policy you purchase, you can pay for your tornado insurance monthly, semiannually, quarterly or yearly.

How Do I Send my Tornado Insurance Bill?

Insurance bills are usually sent in to the insurer via mail with an accompanying check. Alternatively, in most cases you can pay your tornado insurance online through the insurers’ portal or the website. If you have questions about your policy, reach out to your property agent or the insurer.

Do I Pay Taxes on Tornado Insurance?

Generally, you do not pay taxes on monetary compensations received for filed tornado insurance claims. This is because the Internal Revenue Service (IRS) only taxes income and monies you receive that make you wealthier than you previously were. Payments from insurance claims are to get you back to the position you were in before the peril. You may, however, be taxed if you are overpaid by your insurance company and have some money in excess or pay yourself to carry out the repairs on your home. Where you have to pay taxes after your insurance claim, you will be expected to file a form 1099-miscellaneous income.

However, insurance professionals within Texas are required to collect sales and use tax on different insurance transactions within the state. These include inspections, insurance loss and damage appraisals, claims processing or adjustments, investigations, and actuarial analysis or research. Whenever you get coverage, a portion of your premium is passed on to the state as a sales tax that is levied on the insurers who sell products to consumers. Although this is not itemized as a separate line cost on your insurance bill, it is built into your premium cost.

Can you Pay Tornado Insurance Late?

No, you are expected to pay your insurance premium on or before the due date specified by your insurer. However, there is a grace period of 31 days during which you can still make payments if you miss your policy’s due date. Failure to pay your premiums within the grace period could lead to a lapse in your insurance coverage. If a lapse occurs, you will not be covered in the event of a tornado. A lapse in your insurance may also negatively affect the cost of your premium, making it to become more expensive.

Does Tornado Insurance Have a Grace Period?

Yes, Tornado insurance in Texas typically has a grace period of 31 days, within which you can make payments even after missing your company’s insurance payment deadline. If you do not pay the premiums owed within the grace period, you will have a lapse in coverage, and you will no longer be protected. Note that there is also no grace period after termination. If you fail to renew your insurance or make payments after the grace period elapses, you will not be able to make any claims.

What to Do if you Can’t Pay for Tornado Insurance?

If you are unable to pay for your tornado insurance, perhaps because you cannot afford its cost, you can contact a Texas-licensed property insurance agent to help you shop for policies with cheaper premium rates. Your typical homeowners and renters insurance also have limited windstorm coverage, so you will be covered to some extent for tornado damage.

If you cannot get tornado insurance, you can apply for help from the FEMA Individuals and Households Program (IHP). The program helps eligible persons and households that have been affected by disasters such as tornadoes and extreme windstorms. The IHP program provides different types of assistance to eligible persons, including:

  • Providing a temporary housing unit if their homes are uninhabitable

  • Providing funds for temporary housing

  • Providing funds to support the replacement or repair of owner-occupied homes

  • Providing funds for under-insured or uninsured disaster-caused expenses and serious needs such as replacing property or storing personal items.

There are some eligibility criteria that you must satisfy before you can apply for assistance from FEMA. They include:

  • U.S. citizenship or eligibility to live in the U.S.

  • Ownership or occupancy verification

  • Inability of previous insurance claims to handle damage caused by a tornado

  • Identity verification

Will my Tornado Insurance Lapse if I Miss a Payment?

When you miss a payment, your tornado insurance does not lapse immediately; it only lapses after the grace period is over. However, suppose you have any reason to make a claim during the grace period. In that case, you will need to complete your necessary payments up to date before a claim can be entertained and handled by your insurance agency.

If you have further questions about paying for tornado insurance, speak with a knowledgeable and state-licensed Texas property insurance agent.