FEMA Funds, Insurance Expected to Provide Some Relief to Homeowners Who Lost Everything

PHOTO: An American flag blows in the wind at sunrise atop the rubble of a destroyed home in Moore, Okla., on May 21, 2013, a day after a tornado roared through the Oklahoma City suburb, flattening entire neighborhoods and destroying an elementary school w

Even for those who don't lose a loved one after a tornado, the process to rebuild is "long" and "emotional," according to Tammy Cady, 59, who survived the tornado that hit Joplin, Mo., on May 22, 2011.

It took Cady, a graphic designer, and her husband, Kevin, 52, a year and eight months to rebuild their destroyed home in Joplin.

Fortunately for the Cady family, no one was injured, including any of their six children. But when the tornado hit, they had no homeowner's insurance for the home they bought in 1994. They had dropped their $50-a-month policy in 2010, after Kevin lost his job in construction.

"I think the worst part, especially at the beginning, is feeling helpless. I wasn't necessarily feeling helpless for ourselves, but I felt helpless for other people," Cady said. "That's how I feel right now. The only thing that carried us through, from every moment of that time, was knowing that God was helping us. He was definitely looking out for us. He has provided for us every step of the way. It makes me feel sad to the lost but also blessed to know we are taken care of."

After the devastating tornado hit Oklahoma on Monday, U.S. residents are mourning the loss of 24 people in Oklahoma, including nine children.

"I can't imagine for people who lose family. I didn't lose anyone in our tornado. I'm really thankful for that," Cady said.

Infographic: Tornado Facts

The government has more than $11 billion in its disaster relief fund, which may be enough for victims in the suburb of Moore, Okla., outside Oklahoma City.

The costliest U.S. tornado was the one that hit Joplin, which did about $2.8 billion in damage. There were 158 deaths as a result of that disaster.

Judith Spry, partner in the insurance claims services practice at BDO Consulting, said insurance companies have already started to send their people to Moore.

Spry said normal homeowners insurance would cover fire and windstorms. Tornados typically do not require separate policies, like flood insurance.

Record-keeping and paperwork will be important for homeowners and small businesses during the recovery process. Spry said accountants and banks may be able to assist with certain records if they have been destroyed by the tornado.

Business interruption is often covered for business owners if the structure of a building has been damaged and they lose income.

Loretta Worters, vice president of the Insurance Information Institute, said it could take weeks to calculate the number of insured losses and claims from Monday's tornado.

Worters said homeowner's insurance policies also provide for additional living expenses to support the cost of living away from home if you cannot inhabit your house due to damage from an insured disaster.

"It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. So this will be a great help to homeowners whose homes have been destroyed by the tornado," Worters said.

Car damage is covered under the optional comprehensive portion of a standard auto insurance policy.

Three out of four U.S. drivers choose to purchase comprehensive coverage, Worters said.

With nothing left after the tornado hit Joplin, the Cadys lived for some time in a trailer provided by the Federal Emergency Management Agency (FEMA), then with their parents. They just returned to their home in January of this year.

With the exception of only a couple homes, every house on their block was destroyed, Cady said.

In the days following the tornado, the Cadys applied for financial assistance from FEMA's individual and households program. At the time, they received the maximum for households, adjusted annually by the consumer price index, which was about $30,000. The maximum for fiscal year 2013 is $31,900.

"It was really quick. We called them right away when we heard we were supposed to register with FEMA. They came out the next day," Cady said.

Cady said she told a FEMA representative, who typically visit homes with badges or are located at disaster response centers, what was lost and what was recovered.

"When we got to the house the next day, there was rain on everything," Cady said. They managed to save a new couch and some bedroom furniture after scrubbing off what she calls "tornado puke," or debris, from those items. They were also able to salvage some photo albums, but the tornado destroyed artwork Cady had created.

Cady was working as a staff member at a church at the time and her husband had a job as a part-time maintenance worker there. That church helped the family with donations and volunteers to rebuild the home. For that reason, Cady is not sure about the total cost to rebuild her home.

"We had a lot of materials given to us, through churches and private donations," she said, adding that with the help from family and volunteers, "We didn't pay anybody."

Her husband rebuilt the home with volunteers, their son-in-law and her father.

Her husband eventually got a full-time landscaping job and his employer generously lent him machinery to rebuild as well.

In their rebuilt home, the Cadys installed a storm shelter made of concrete with two entrances.

On Monday night, when a storm hit Joplin, the Cadys and neighbors who live in a trailer sat in the shelter with a pet dog and bird.

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