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Hail Damage Waivers Reduce Your Coverage Costs

Colorado is home to three of the top ten most hail-prone cities in the nation, according to a study compiled by CDS Business Mapping, LLC, a Boston-based online hazard mapping firm. 1

Top 10 Most Hail-Prone CitiesCDS’ top 10 list of hail-prone metro areas (with a minimum population of at least 50,000) is based on the RiskMeter Online’s Hail Model, which predicts the frequency of hail storms for all locations in the Continental U.S.

While Denver, Aurora, and Colorado Springs all made the top ten, hail is also frequently present in surrounding cities; especially those that reside east of the Rocky Mountains. That’s because Colorado’s Front Range is right in the middle of “Hail Alley,” the area in the U.S. that experiences the highest frequency of large-sized hail. 2

Hailstorms can cause significant damage and property loss. Over the last 10 years, hailstorms in Colorado alone have caused more than $3 billion in insured damages. The threat of damaging storms exists throughout the year, but the most prevalent season for hail ranges from mid-April to mid-August. In fact, the Community Collaborative Rain, Hail & Snow Network recorded 685 separate reports of hail during this period in 2014, an average of more than five hail incidents per day throughout the state.

The most costly catastrophe in the state’s history was due to damages sustained from hail and wind. In fact, seven of the ten most costly natural disasters in Colorado history resulted from wind and hail.

Hail storms can also develop outside of the typical hail season. One such storm occurred at the end of September 2014 over the Denver Metro area. With losses totaling well over $200 million, this was one of the most costly hail storms in Colorado history.

The CSD Pool has been substantially impacted by hail losses over the past five years.  Because of this, we will be surcharging rates throughout the Front Range by about 15% with two opportunities to reduce the increase by 10%, either by taking a Hail Deductible to match the Flood and Earthquake Deductible, or by agreeing to a Cosmetic Hail Damage Waiver.

While hailstorms can and do cause significant damage, sometimes that damage is purely cosmetic and does not alter the functionality of a building or property. By agreeing to waive coverage to repair or replace scheduled properties that suffer only cosmetic damage that has no effect on functionality, your district can receive a significant credit on your annual Property coverage contributions.

This Cosmetic Damage Waiver includes an exception for damage to visibly exposed front-entry areas composing less than 25 percent of the roof. This waiver is a great way to save your district–and the Pool–significant money.

Another way to minimize the risk and costs from hail and wind is by upgrading to impact-resistant roofs. In the event of loss or damage to a covered building under the Pool’s Coverage Document, the Pool will share the cost for better hail and wind resistive materials.

The Pool also gives the option of Green Construction Upgrades in the event of a covered loss. These upgrades apply to repairing damaged buildings using more energy-efficient and environmentally-preferable materials, products or methods in design, construction, manufacture or operation, as recognized by the green standards-setter LEED or other recognized equivalent.

If upgrading to hail impact resistant roofing or utilizing the green construction upgrade option, the increased cost of replacement shall be equally shared between the Member District and the Pool. This coverage is limited to the lesser of $250,000 or 25 percent of the scheduled value of the building on file with the Pool. However, the Pool shall not be liable for any such increased cost unless the damaged property is actually rebuilt or replaced using hail impact resistant roofing.

For more information about this line of coverage and related claims and waiver information, please contact Sandy Carter at (503) 943-6373.

Special thanks to Wyatt Roop who contributed to this article.

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