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Obtaining Adequate Roof Insurance

The recent cycle of extreme weather has created havoc for residents, businesses, and insurance companies all over the country. Severe wind and hail storms in particular have left large swaths of destruction, especially in states that are at risk for these weather conditions.

Texas was number one in the country for the most hail damage with nearly 400,000 claims reported from 2013 through 2015, according to the National Insurance Crime Bureau. Grapefruit-sized hail hit the San Antonio area last April, causing almost $1.4 billion in estimated insured losses. That hailstorm is the costliest in Texas history.

With a high concentration of self-storage facilities located in states susceptible to hail, tornadoes, and hurricanes, property losses have soared into the millions. Insurance companies have reported record losses for residential and commercial properties, forcing some carriers to put limitations on certain kinds of coverage while others have stopped issuing storm policies altogether.

Owners of storage facilities in affected areas need to prepare for the harsh realities of extreme weather conditions going forward. It may be difficult or nearly impossible to secure adequate insurance in areas frequently hit by wind and hail, however alternative policies are available to self-storage operators to keep them from being left out in the elements.

Companies Roll Out Limitation Endorsements

In response to the changing weather patterns and rising claims, insurance companies are rolling out a number of limitations affecting self-storage facilities.

“All carriers are going to have to add endorsements if they’re going to continue to write policies in these areas, and adding risk exposure and cosmetic endorsements is one way of addressing that,” says Don Sedlacek, vice president of claims for MiniCo Insurance Agency.

One endorsement developed to address coverage for hail exposure mitigates cosmetic storm damage that does not impact the integrity of the roof. Phoenix-based MiniCo offers a cosmetic loss limitation endorsement as a solution for self-storage owners with locations in hail-prone areas who are having a hard time acquiring property coverage. This endorsement is filed for use in Arkansas, Colorado, Kansas, Missouri, Nebraska, Oklahoma, and Texas.

While the endorsement limits coverage for cosmetic damage to roofs, the policy still covers superficial hail damage to roll-up doors, siding, downspouts, and gutters. The endorsement provides coverage for hail damage to metal roofing only when the roof covering fails to keep out the elements.

“That is protecting the insurance company so that every time a hail storm comes in and dimples a roof, the insurance company is not replacing the whole roof,” explains Chris Nelson, new business team supervisor for MiniCo. “Claims have been increasing because there are companies that follow hail storms and generate a lot of business for themselves by telling owners their roof needs to be replaced. The roof is perfectly good; it’s just aesthetically not.”

Roofers who specialize in self-storage have vast experience with metal roofs and have seen a wide range of wear and tear as well as storm damage.

“Different types of roof systems stand up to hail and wind better than others,” says Andy Sullivan, president of Georgia-based ReRoof USA. “For example, because a metal roof has minor dents on the surface does not mean the roof is not serviceable. In an architectural or steep slope application, cosmetic damage can be a real problem. The biggest concern to a metal roof is larger hail that can compromise the finish to the metal panels or even possibly cause micro-fractures that can cause rust years down the road.”

Additional Wind And Hail Protection

Another way to provide insurance coverage in areas where wind and hail damage is prevalent is with a percentage deductible. This is typically between two percent and five percent of the building value. For example, a $600,000 building with a five percent deductible would mean that the owner is responsible for the first $30,000 cost of repairing the roof damage caused by wind or hail. This deductible may be applied per building or to multiple buildings on the property.

Another policy offered in areas prone to wind and hail damage is the deductible waiver option. This endorsement provides the option to waive the property deductible when the insured owner and the company mutually agree to choose elastomeric roof coating in place of roof replacement to repair cosmetic loss or damage to roof coverings caused by wind or hail. This option is available in Arkansas, Colorado, Kansas, Oklahoma, and Texas.

“If the existing roof was still sound but it was deemed that it needs to be replaced, we’d give owners an option where they could keep the existing roof, have it repaired and coated with elastomeric type roof coating, and we would waive the deductible that they would normally have to meet to replace the roof,” says Keith McConnell, vice president of business development for MiniCo.

MiniCo Insurance Agency also offers a wind/hail deductible buy-back program for commercial property. The buy-back program is designed to decrease the potential out-of-pocket financial exposure for property owners.

Wind and hail deductibles for commercial property are rising to seven percent or more in many areas of the United States. The buy-back policy lowers the deductible to as little as one percent or a specific dollar amount when the owner pays a premium to reduce the existing deductible.

Addressing Maintenance Issues

While the most common causes of roof damage are wind and hail, a lack of maintenance can also contribute to roofing problems. “Yearly inspections or ongoing maintenance to the roof is very important to prevent a maintenance issue from becoming a major roof replacement or interior damage,” Sedlacek says.

He adds that a growing cause of roof claims is ice damming. Ice dams are ridges of ice that form at the edge of a roof and prevent melting snow from draining off the roof. The water that backs up behind this dam can leak into the building and cause damage to walls, ceilings, insulation, and other areas.

To combat roof dams, the Insurance Institute for Business & Home Safety recommends increasing insulation above ceilings and making periodic roof drainage inspections. Also, keep all drains, gutters, and downspouts free of debris and vegetation. Prune trees that hang over the roof to prevent an accumulation of leaves and branches that may clog or slow roof drainage. Employing a professional snow-removal company is one way to eliminate the source of a potential ice dam.

While no roof can be expected to stand up to hurricanes, tornados, or major hail storms, the extent of damage from many storms can be diminished by installing better quality materials.

“Whether you’re talking new construction or existing, the quality of materials relative to geographic locations has a huge impact on how well facilities can weather these types of storms,” Sedlacek says. “If you are using a lighter gauge of metal in Texas, you are probably going to have more severe damage to your roof than a facility across the street that has used proper materials.”

As more insurance companies move away from automatically replacing roofs, owners should consider sturdier materials.  “It’s more important than ever that an owner thinks of investing in a durable roof for the future because you may find you’re not going to have this type of replacement coverage,” McConnell says. “If the option is available now to get a much more durable coating on the roof, it might make sense to take it.”

There are different types of roofs that stand up to the elements better than others. Sullivan says thicker membrane systems and some shingle products on the market have higher impact resistance as well. ReRoof USA installs a standing seam roof system that is UL listed and carries a Class-4 impact resistance.

Just as important as the roofing materials is the quality of the contractor you hire to repair or replace a roof. Some companies follow storms and show up at an owner’s door to pitch new roofs that insurance companies will pay for but may not be required. These roofers sometimes are better at filing insurance claims than performing quality work.

Be sure to use licensed and bonded contractors and check their references. You can have the right roofing material but you could be faced with more headaches down the road if the contractor does not know the proper way to install or repair a self-storage roof.

“There is value in utilizing a contractor with experience in handling or assisting with roof insurance claims. However, I have seen contractors who excel in this area but struggle with large or complex roof projects,” Sullivan says. “Spend time searching for an established roofing contractor first who also has experience with insurance claims.”

David Lucas is a freelance writer based in Phoenix, Arizona. He is a frequent contributor to all of MiniCo’s publications.

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