Colorado Severe Hail Storms Causing Insurance Policy Restriction of Coverage
Wind and Hail insurance claims continue to increase across the country and particularly Colorado where we rank in the Top 10. The May 8, 2017 that centered in the Lakewood/Golden area cost insurance carriers over $2.3 Billion dollars just from that hail storm alone! It is also noted that hail stones are getting larger and the downpours are longer in duration than in previous years. Clients are complaining like crazy about rising home insurance rates, but when their homes are hit by these monster storms, they want their homes repaired and their roof replaced.
These continuous large payouts by the insurance carriers are not very sustainable, so carriers are looking for ways to ‘share’ the cost with the public. Be aware of these industry changes in policy language which can restrict coverage in the event of the next hail/wind storm.
Excluding Cosmetic Damage
If the storm only damages the roof with dents, but it is still structurally sound, some carriers are excluding this type of repair. This usually can come into play for steel, metal or wood shake roofs.
Mandating Higher deductible for Wind/Hail Claims
Carriers are increasing the minimum ‘flat’ required deductibles for a wind/hail claim such as a $2,500, $5,000 deductible. And they are also might start requiring a deductible equal to one, two, or five percent of the building reconstruction limit. For example, if the policy carries $1million to replace the building and a 10% deductible for a wind/hail claim, the deductible to file a wind/hail claim is $100,000. Ouch!
Changing Loss Assessment Coverage on the Condo/Townhome Owner Policy
Homeowner Associations have been combating rising deductibles by suggesting to unit owners to purchase Loss Assessment coverage on their personal Condo/Townhome insurance policy. Loss Assessment coverage will pay the homeowner’s share of the assessed deductible amount. But this too is being analyzed by the carriers for a way to restrict coverage. Make sure to call your agent and discuss the terms of this coverage. Some carriers are starting to limit the amount they will pay the homeowner (under the loss assessment coverage) due to a wind/hail claim by the HOA.
Regardless if you think the recent extreme hail storms in the Golden, Lakewood, Arvada and Denver areas are due to climate change, or not, the reality is our weather is getting more severe resulting in higher insurance costs for all of us. Be prepared for changes in your home insurance policy and/or HOA policy to restrict coverage. We are happy to give you more information on this topic.