The impact that catastrophic hail and wind events have had on property owners and the insurance industry would be difficult to overstate. The National Oceanic and Atmospheric Administration (NOAA) recorded 4,611 major hailstorms in 2020. Those storms affected more than 6.2 million properties in the U.S. resulting in losses of nearly $14.2 billion according to the Verisk report The Hail Hazard And Its Impact On Property Insurance (2021).
We generally think of hail storms occurring during spring months, but data from the past several years indicates that severe storms can occur throughout the year. The Verisk report notes that the threat of severe hail storms now extends well outside of “hail alley” (Colorado, Nebraska, and Wyoming) to include the Midwest, Gulf Coast, Appalachia, and the desert Southwest. In 2020, the 10 states with the highest number of major hail events were (in order) Texas, South Dakota, Kansas, Oklahoma, Nebraska, Minnesota, North Dakota, Missouri, Colorado, and Iowa.
Hail events can cause catastrophic damage to commercial buildings and often result in repairs or replacement of the entire roof or the damaged portions of the roof. For property owners, this is an unwelcome and unavoidable potential peril. However, property owners can take action to prepare for severe weather and help minimize storm damage. Here are some recommendations to help protect and prepare your property from the costly effects of hail damage.
Insurance – Review your coverage with your insurance agent with special attention on valuation. Verisk’s report 360Value Reconstruction Cost Analysis Q4 2021(United States) indicates that total reconstruction costs, including materials and labor, increased nearly 5.8 percent from October 2020 to October 2021 with increases shown in all states. For materials, interior trim had the highest increase at 26.4 percent, and plumber and electrician costs had the highest increases for labor at 5.7 percent and 5.4 percent respectively. With that in mind, it is critical for property owners to understand the out-of-pocket exposure they face and choose limits and deductibles adequate to cover a potential catastrophic loss. Given the current underwriting and reconstruction cost trends, a mid-term adjustment to your policy may be a wise investment of your time.
Facility Maintenance – Prepare your property for severe wind and hail with maintenance tasks that can help reduce potential damage. Trim trees to prevent damage from falling limbs and falling trees. Make sure equipment is secured in a protective structure. Tie down construction materials and other items that could become airborne and cause damage during a severe storm.
Roofing – Schedule regular inspections with a qualified roofer to evaluate the condition of the roof and perform necessary maintenance on any areas identified as defective. During new construction or when reroofing, consult roofing professionals with self-storage experience to assist in evaluating roofing materials to help mitigate potential damage from weather-related activity. In addition, install protective shields or screens over skylights, HVAC units, and other roof-mounted equipment. Hail nets could also be a consideration.
Pre-Fund – If you are located in a high-risk area and your policy has a large percentage or flat deductible, it is highly recommended that you create an insurance fund to limit the financial impact of a catastrophic event. You also may want to consider a wind-deductible buy-back policy especially if you are located in high-risk areas for wind and hail.
Your insurance agent is an excellent source for risk management strategies and resources. Liberty Mutual Insurance, one of MiniCo’s carriers, has prepared a detailed hail action plan that is available for download at www.minico.com/hailplan. Resources for business owners are also available at the Federal Emergency Management Agency (FEMA) website www.ready.gov.