UPDATE 4-Tornadoes kill at least 37 in U.S. Midwest, South
* Twisters hit Indiana, Kentucky, Ohio, Alabama, Georgia
* Lucky escape for 40 at Kentucky school
* Insurance industry braces for heavy losses
By Susan Guyett
HENRYVILLE, Ind., March 3 (Reuters) - Rescue teams and residents combed through storm-wrecked towns to assess damage on Saturday from a chain of tornadoes that cut a 1,000-mile swath of destruction from the Midwest to the Gulf of Mexico, as the death toll crept up to at least 37 people .
The fast-moving twisters spawned by massive thunderstorms splintered blocks of homes, damaged schools and a prison, and tossed around vehicles like toys, killing 18 people in Kentucky, 14 in neighboring Indiana, three in Ohio and one in Alabama, officials said. Georgia also reported a storm-related death.
"We're not unfamiliar with Mother Nature's wrath out here in Indiana," Governor Mitch Daniels told CNN during a visit to the stricken southeast corner of the state.
"But this is about as serious as we've seen in the years since I've been in this job," he said, standing against the backdrop of the hard hit town of Henryville.
Friday's storms, spanning 1,000 miles from the Gulf of Mexico to near the Great Lakes, came on top of severe weather earlier in the week in the Midwest and brought the overall death toll to 49.
Tornadoes smashed Indiana and Kentucky terribly hard, with Alabama, Georgia, Ohio and Tennessee overrun as well.
President Barack Obama called the governors of Indiana, Kentucky and Ohio to offer condolences and assure them that the federal government was ready to help if needed, the White House said.
Television footage from some of the worst-hit towns in Indiana and Kentucky showed houses lifted from their foundations, trees downed and stripped of their foliage, and rubble scattered across wide swathes of land.
Tony Williams, 46, owner of the Chelsea General Store in southern Indiana, said four people died in the Chelsea area, including 4-year-old Daylin Terry Jackson and his great grandparents, Terry and Carol Jackson, both in their late 60s.
The boy and his mother, Amanda Jackson, were in a basement when the storm hit on Friday afternoon, and he was torn from her arms by the tornado. The mother survived, but her grandparents who were upstairs both died.
"She was in the cellar with the boy when the tornado hit. It blew him right out of her hands," Williams said. "They found the bodies in the field outside," he added, referring to Daylin and his great grandparents.
Williams said 60 local school children took refuge in his store overnight.
But in a sign of hope amid the destruction, a 2-year-old girl was found alive in a field in Salem, Indiana, west of Chelsea, authorities said.
"When she was brought down here they didn't know who she was," said Brian Rublein, a spokesman for Kosair Children's Hospital in Louisville, Kentucky, where the girl was taken by helicopter. "At last report she was in critical condition," Rublein said, saying members of the girl's family had arrived at the hospital to be with the child.
LUCKY ESCAPE AT SCHOOL
In Henryville, birthplace of Harland David "Colonel" Sanders, who founded the Kentucky Fried Chicken fast-food chain, ground zero for the storm was a downtown complex housing an elementary, junior high and high school, where 1,400 students attend on a normal day.
Almost all them were evacuated on Friday before the tornado struck. But about 40 staff and students who were the last to leave on school buses turned back when they saw ominous signs of the approaching storm in the sky.
They took shelter in an inner office in the elementary school where they rode out the tornado, even as it ripped the front off the elementary school building, leaving a dangling mess of twisted metal and insulation.
"We could have been in big trouble," said Pam Horton, the elementary school treasurer. "I will never take tornado warnings lightly again."
"It's shocking," Henryville High School Principal Troy Albert told a local TV station. He said he was "just amazed" that everyone at the school eventually managed to get out safely.
One of the school buses was flipped onto its side by the storm. Another sat with its engine sheared clean off the chassis and its rear end embedded in the front of Budroe's restaurant, a diner across the street where other residents had taken shelter.
Miraculously, only one resident of the town died, according to rescue officials.
Friday's band of tornadoes, with at least several dozen sightings and touchdowns, has already been compared to the "Super Outbreak" of twisters of April 1974, one of the largest and most violent in the United States.
Friday's storms came less than a year after a series of tornadoes caused some of the worst insured losses in U.S. history, and the insurance industry is likely facing substantial costs again. [ID nL2E8E2BOR].
Aerial TV footage showed battered homes across several states, including Georgia, where light planes were lifted off the tarmac of a regional airport in Paulding County before smashing back to the ground.
An Indiana official confirmed 14 deaths from the tornadoes on Friday, in four southeastern counties. A spokeswoman for the Kentucky governor reported a statewide death toll of 18, while Ohio officials said there were three deaths in a single county.
Storm warnings had been issued throughout the day Friday, from the Midwest to the Southeast, and schools and businesses were closed ahead of the storms after a series of tornadoes earlier in the week killed 13 people in Kansas, Missouri, Illinois and Tennessee.
This week's violent storms raised fears that 2012 will be another bad year for tornadoes after 550 deaths in the United States were blamed on twisters last year, the deadliest year in nearly a century, according to the National Weather Service.
The highest death tolls were from an outbreak last April in Alabama and Mississippi that claimed 364 lives, and from a May tornado in Joplin, Missouri, that killed 161 people.
Authorities said 40 homes were destroyed and 150 damaged in two northern Alabama counties on Friday. One person died in a home in Tallapoosa County, according to Joe Paul Boone, the director of the local Emergency Management Agency.
Alabama officials said a prison, Limestone Correctional Facility, sustained roof damage to two dormitories, forcing 300 inmates to be moved to elsewhere in the facility.
No one was seriously injured at the prison and there were no risks of prisoners escaping, though there was damage to some perimeter fencing and a canteen, said Brian Corbett, a spokesman for the Alabama Department of Corrections.
Multiple tornadoes also struck Tennessee and along the Ohio River valley in Illinois.
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