Tornado Damage and Selling a House in Oklahoma

Why this is not a bigger hail claim

Oklahoma owners have a lot of experience with storm claims, and that experience can mislead after a tornado. Tornado damage is structurally a different problem from hail or straight-line wind, in three ways.

• The damage is frequently not repairable in place. Hail damages surfaces. A tornado moves structure: walls out of plumb, a roof structure lifted and dropped, a frame racked. You cannot resurface that
• It is often a total or near-total loss, which brings an entirely different part of the policy into play and changes the question from what the repair costs to what the house was worth
• It happens to whole streets at once, which means every contractor, adjuster and supplier in the area is oversubscribed at the same moment, and the timetable stops being about your house

That third point does more practical damage to owners' plans than people expect. The mechanics of hail damage and roof insurance and of the wind and hail deductible still apply to the parts of your claim that are ordinary storm damage. What follows is the part that is not.

Partial damage, which is the commonest case

Most houses touched by a tornado are not flattened. They are damaged at the edge of the track, and that is a repair job with some specific traps.

• Get the structural question answered first, by an engineer. Not by a contractor and not by an adjuster. Whether the frame moved is the question that determines everything else, and it is the one most likely to be missed in a week when everyone is overwhelmed
• Expect hidden damage, which on this kind of loss means water that entered while the roof was open, debris impact behind cladding, and racking that shows up later as doors that will not close
• Document before anything is touched. Photographs, video, and a written scope. The pressure to tarp and clear is real and legitimate; do it, but record first
• Beware the contractor who arrived unasked. After an Oklahoma tornado every affected street gets visitors. Our page on how rescue scams work describes a different scheme with the same psychology, which is urgency plus a signature
• Mind the insurability question. A claims history follows the property, and a buyer's ability to get cover can matter as much as the repair. See house insurability in Oklahoma

Whether your policy pays replacement cost or actual cash value will shape the numbers throughout, and it is worth establishing before you negotiate anything. Our post on actual cash value against replacement cost covers the difference.

Total and near-total loss

This is the situation this article exists for, because the rest of the site's storm content does not cover it.

When a house is destroyed or so damaged that repair is not sensible, you are no longer dealing with a repair estimate. You are dealing with the policy's dwelling limit, the terms on which it pays, and the fact that what you own has effectively become a lot with debris on it plus a claim.

Things that commonly come into play, all of which are policy-specific and none of which this article can confirm for your policy:

• Whether cover is replacement cost or actual cash value, and whether any part of the payment is held back until the work is actually done
• Debris removal, which is usually its own provision with its own limit and is a real cost on a destroyed house
• Additional living expenses, covering somewhere to live, usually for a limited period that can expire long before a rebuild finishes
• Ordinance or law cover, which deals with the fact that a rebuild has to meet current codes rather than the code the house was built to. On an older Oklahoma house this gap can be large
• Other structures, separately limited: the detached garage, the shop, the fence
• Any storm shelter and whether it is treated as part of the dwelling or separately

Read your own declarations page and ask your agent to confirm each of those in writing. If the claim is large or the insurer's position is unfavourable, a public adjuster may be worth the percentage, and many policies contain an appraisal clause for resolving valuation disputes without litigation. If a claim has been refused outright, a denied claim is not the end of the matter.

Who controls the money

Owners are regularly caught out here, and it is worth knowing before you make plans.

Where there is a mortgage, the lender is commonly named on the policy, and on a loss of any size the funds are frequently payable to both of you or released in stages against proof the work has been done. That means the cheque may not be yours to spend, and a servicer's release schedule is its own timetable on top of the contractor's.

If you intend to sell rather than rebuild, the question of who receives the proceeds becomes a term of the contract and not an afterthought. Our post on selling with an open insurance claim covers that in detail, and it is the companion piece to this one. We are not going to tell you who owns your proceeds, because that depends on your policy, your contract and your mortgage, and none of those can be read from here.

Rebuild, repair or sell

Once the claim position is reasonably clear, there is a decision, and it is rarely purely financial.

Rebuilding makes sense when the payout plus your own funds genuinely covers a build to current code, you can house yourself for however long it takes, and you want to be on that land afterwards. The code gap and the length of the build are the two things people underestimate, and in an area where hundreds of houses are being rebuilt simultaneously the schedule is not yours to control.

Repairing is the straightforward answer on partial damage to a sound frame, and most owners in that position should do it.

Selling tends to win when several of these are true: the rebuild cost exceeds what the land plus the payout supports, you were already thinking about moving, the additional living expenses period will run out before a build completes, you are managing this from out of state, the property was a rental rather than your home, or you simply do not want to project-manage a year of construction after what you have just been through. That last one is a legitimate reason and people treat it as though it is not.

Our net proceeds calculator and holding cost calculator are both useful here, because the monthly carrying cost of a destroyed house you are still paying a mortgage on is a real number that belongs in the comparison.

Selling a tornado damaged house, practically

• Settle the proceeds question in the contract. Who receives the claim money and who does the work are the two things that must be written down
• Expect a cash buyer pool. A financed buyer's lender generally needs the security to be habitable, so on significant damage most financed buyers cannot proceed until it is repaired
• Disclose what you know. Oklahoma's seller disclosure requirements cover known defects, and a storm loss with a claim file is not something to leave off
• Keep the engineer's report and the adjuster's scope. On this kind of sale, documentation increases what a serious buyer will pay, because it replaces their guesswork with a number
• Do not clear or demolish before you have decided. Debris removal may be covered, and a buyer may want the slab or the salvageable structure. Removing it can cost you twice

Selling the lot instead

Where a house is gone, what you are selling is land, and land sells differently. Buildability, access, utilities already at the plot and what the zoning permits become the whole of the conversation. Our page on selling land in Tulsa covers that, and it is a genuinely different transaction from selling a house.

One point specific to this situation: a cleared lot in an established neighbourhood with utilities already run to it is frequently worth more to a builder than owners assume, because the expensive part of creating a buildable lot has already been done. That is a reason to find out the number before assuming the land is worth little.

The short version

• Tornado damage is a structural problem, not a surface one, and is frequently not repairable in place
• Get an engineer to answer the structural question before anybody else prices anything
• On a total loss the relevant parts of the policy are the dwelling limit, debris removal, additional living expenses and ordinance or law cover. Read your declarations and get answers in writing
• Where there is a mortgage, the lender is commonly on the cheque and controls the release of funds
• Rebuilding is right where the payout plus your funds covers current code and you want to be there. Selling is right more often than owners expect, especially on rentals, from out of state, and where the living expenses period will expire first
• Do not clear the site before deciding, and keep every report