The frequency and severity of billion-dollar hail events has significantly impacted the insurance industry. Data from the National Centers for Environmental Information (NCEI) reflect five such events in 2019 alone. These events caused severe damage in 19 states with estimated losses totaling over $10 billion. The most costly hail event of the year occurred in May when a four-day severe storm outbreak produced 190 tornadoes, damaging hail, and straight-line thunderstorm winds. The resulting insured losses across 12 states exceeded $4.5 billion.
Hail storms historically appear during spring months, but the current trend demonstrates that severe storms can occur throughout the year. They can cause catastrophic damage to self-storage facilities and often result in repairs or replacement of the entire roof or the damaged portions of the roof. For property owners in areas prone to hail storms, this is an unwelcome potential peril and one that can’t be avoided. However, business owners can take action to prepare for severe weather and help minimize storm damage. Here are some recommendations to help protect and prepare your clients who own self-storage businesses from the costly effects of hail damage.
- Insurance – Schedule a coverage review with your client being sure to address potential exposures caused by hail and wind. In response to this loss trend, insurers are applying stricter underwriting guidelines with higher deductibles, increased premiums, and endorsements limiting coverage. In addition, carriers have become more likely to decline to quote wind/hail coverage or decline offering a quote for the entire risk. In the most challenging locations, wind/hail deductibles of up to five percent may be applied to property insurance policies, which can create a large financial exposure for the business owner in the event of a major loss. MiniCo offers a stand-alone wind/hail deductible buy-back policy that lets policyholders mitigate the financial exposure by lowering the deductible to as little as one percent or a specific dollar value.
- Facility Maintenance – Prepare the 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.
- Roof Inspections and Maintenance – Schedule regular inspections with a qualified roofer to evaluate the condition of the roof and perform necessary maintenance on any areas identified as defective.
- Roofing Design and Materials – During new construction or when reroofing, the design and material quality are key considerations. It is important to consult roofing professionals with self-storage experience to assist in evaluating these critical building components in order to help mitigate potential damage from weather-related activity.
- Protective Shields – Install protective shields or screens over skylights, HVAC units, and other roof-mounted equipment. Hail nets could also be a consideration.
- Pre-Fund – If the business is located in a high-risk area and the insurance policy has a large percentage or flat deductible, it is highly recommended that the business owner create an insurance fund to limit the financial impact of a catastrophic event.
Liberty Mutual Insurance, one of MiniCo’s carriers, has prepared a detailed hail action plan that is available for download at http://www.minico.com/hailplan. Resources for business owners are also available at the Federal Emergency Management Agency (FEMA) website http://www.ready.gov.
President and CEO