100,000 businesses, 1,500 corporate headquarters, and 6.8 million people call Dallas Fort Worth home. For all of the benefits of living and working in North Texas, we all have one exposure we have to deal with, hail. Hail season runs primarily from March through May where we all keep one eye up at the sky.
On April 12, 2016, Texas had the single largest hailstorm on record with losses of $1.4 Billion dollars. 2016 total hail losses in Texas exceeded $4 Billion dollars in March and April alone. Make sure you understand these 3 key pieces of your wind and hail insurance coverage as we all hunker down for hail season this year.
Wind & Hail Deductibles
Your Business and Homeowners policy will have a deductible for wind and hail which will either be a flat dollar amount (i.e. $1,000+) or a percentage (ie.1% to 5%).
If your policy has a percentage deductible, you need to understand how your policy defines that deductible. Most homeowners and business owners believe that the percentage is multiplied by your home or building value. That is true for the most part in Home insurance, but on your Business insurance policy it may also include the value of your contents as well as your business income and extra expense values.
Exclusions & Limitations
There are two commonly found endorsements that limit or exclude coverage for wind or hail.
- Cosmetic Exclusion – this endorsement removes coverage for roofs that are visibly damaged by hail, but the structural integrity is not compromised. So if a roof surface is dented, but there is no structural damage, there would be no coverage.
- Roof Valuation Limitation – this reduces your coverage by the depreciated amount of the roof, often referred to as “actual cash value” rather than replacement cost. This endorsement may be used for roofs over a certain age or for all roofs.
Ordinance & Law
Older roofs may not conform to current building codes and some policies limit the coverage, only replacing the roof in its current condition. The additional costs to meet those codes upgrades will be paid by a separate coverage limit that may or may not be built into your insurance policy. For example, I had a church whose tile roof was damaged by hail. The underlayment thickness below the tile roof was not up to code. The additional expense was over $500,000 to remove the current underlayment and upgrade to meet the code requirements. Many policies limit or may not contain this coverage.
In 2017 Texas had 747 hail events, so make sure you understand what your policy covers. Hail losses in Texas are less than an “if” and more of a “when”. It is important to understand how a claim will be handled BEFORE something happens.
By: Brian Tucker, CPCU, CIC, CRM – Senior Vice President, Principal RHSB
The information in this article is made available for general information purposes only. It is not intended to provide specific regulatory, scientific, or legal advice. The content must not be relied upon as a sole source to determine regulatory compliance or any obligation under state or federal law. We advise consultation with outside legal counsel should you require further information.