Insurance Companies Change their Hail Policies

March 15, 2018

Hail season is about to arrive and so it’s hard not to think of May 8, 2017.

Late that afternoon, a massive storm barreled through the Denver area, unleashing baseball-sized hail just as many of us were leaving the office for the day.

The damage was widespread, although it was most evident around the Colorado Mills mall on the west side of Denver.

Claims amounted to nearly $1.5 billion, ranking the storm as the most expensive natural disaster in our state’s history.

This is what it means to live in “Hail Alley,” a swath that covers Colorado’s Front Range, parts of Nebraska and Wyoming.

And now, while the rest of the country looks forward to March coming “in like a lion, (and going out) out like a lamb,” we Coloradoans can only nervously anticipate the thunderous hail storms that typically accompany April, May, June, July and August.

Deductibles Based on a Percentage

How many big storms can we expect this year? No one knows.

What is known is that up to half of your homeowner’s insurance premium may be going to hail and wind damage costs.

What also is clear is that, for many, the days of an insurance company paying in full for a brand-new roof when theirs is damaged in a hail storm are over.

As we’ve reported in the past, a growing number of insurers are adopting a whole new way of calculating what they’ll pay on hail claims.

Rather than covering the full replacement cost, they’re shifting to depreciation schedules that are based on the age of your roof. The older the roof, the smaller the share of the replacement cost that they’ll pay.

Some insurers also are imposing percentage deductibles for hail damage, which can mean you’re responsible for a portion of the loss up to, say, 2 percent of the insured value of your home. For a house insured for $400,000, 1 percent equals a $4,000 deductible.

At the same time, some carriers are increasingly expecting the homeowner to assume a higher deductible. The owner of a home in the $400,000-$750,000 range can now typically expect to have a minimum $5,000 wind/hail deductible.

As you might expect, the type of roof on your home will change the payouts, too. For example, some insurers will cover 70 percent on a 30-year-old slate roof while covering just 40 percent of the cost on a tile roof that is as old.

In short, hail claims just aren’t being handled the way they used to be.

What to Do After a Hail Storm

Some advice from the Rocky Mountain Insurance Information Association:

• Check trees, shrubs and plants around your house. If they are stripped of their foliage, there is a possibility that your roof is damaged. You should also check for roof damage if patio covers, screens or soft aluminum roof vents are dented.
• Check your car for dents and broken or cracked glass.
• If you find signs that hail has battered your property, take immediate steps to protect it from further damage.
• Cover any broken windows and holes in your roof so that no water can enter and damage your home’s interior.
• Cover any broken glass in your car to prevent damage to the interior from rain and remove glass from the car’s interior to prevent cuts in upholstery and carpet.
• Call your agent or company as soon as you notice damage. Practically all homeowner’s policies cover hail damage. Your car will be covered if you’ve purchased comprehensive coverage.
• If your agent or company requests you to do so, follow up your call with a written explanation of what happened.
• Save receipts for what you spend and submit them to your insurance company for reimbursement.
• After an insurance adjuster has surveyed the hail damage to your property, select a reputable roofing company or auto body shop to make repairs.
• Allow only the insurance adjuster and roofer you have selected to get up on your roof. Each time someone walks on it, more damage can occur.
• Be wary of out-of-town roofers who move into an area and set up shop following a storm. While most of these firms are reputable, some have collected money from homeowners and moved on to the next storm site without paying suppliers or leaving work unfinished. This can leave homeowners holding the bag for those additional costs. It’s a good idea to select a company with established credibility and local references. Word of mouth is still your best guide.
• Be sure roofers have worker’s compensation and liability insurance. If they don’t, you may be held liable if one of the workers is injured or if they damage a neighbor’s property.
• Don’t make final payment to the roofing company until your roof has been inspected and you are satisfied.

Daniel Rizzo is a CCIG personal lines account manager. Reach him at DanR@thinkccig.com or 720-330-7905.

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.

Did you know? About 60 percent of all U.S. homes are underinsured by an average of 20 percent, according to CoreLogic, a company based in Irvine, Calif., that provides data to most major home insurers. Many factors can lead to being underinsured, including rising labor and construction costs, remodeling or additions since the policy was purchased, and errors in the original policy’s property description.

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