Billion-dollar hail events are on the rise. Data from the National Centers for Environmental Information (NCEI) reflect five such events in 2017 alone. Occurring over several days in March, May, and June, these hail events caused severe damage in 19 states with estimated losses totaling over $11 billion. The most costly single hail event of the year occurred in May when baseball-sized hail fell on the Denver metro area during rush hour. The insured losses from that storm exceeded $2.2 billion, making it the most expensive hail storm in Colorado history.
Hail Damage to Self-Storage Properties
Hail storms 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 expected, if decidedly unwelcome, potential peril. However, the pattern of these storms has been changing over recent years, becoming more frequent and more severe. It appears that this trend may now be the “new normal.”
Stricter Underwriting Guidelines
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. With that in mind, here are some recommendations to help self-storage business owners protect their facilities from the costly effects of hail damage.
- Insurance – Schedule a coverage review with your insurance agent being sure to address potential exposures caused by hail and wind. MiniCo offers a stand-alone wind/hail deductible buy-back policy that lets you lower the deductible to as little as one percent or a specific dollar value.
- Roof Inspections and Maintenance – Schedule regular inspections with a qualified roofer to evaluate the condition of the roof and perform the 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.
Insurance agents are 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 https://www.minico.com/hailplan. Resources for business owners are also available at the Federal Emergency Management Agency (FEMA) website https://www.ready.gov.
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