Springtime means warmer weather, increasingly longer days, and..hailstorms! May is the most active month, although it's not uncommon for a hailstorm to hit in the summer or even into the fall.
Hail is formed when drops of water freeze together in the cold upper regions of thunderstorm clouds. These chunks of ice are called hailstones, and they can cause extreme damage to buildings and vehicles.
Why Public Entities are Vulnerable to Hailstorms
Hailstorms are of particular concern for public entities because of the large number of government buildings situated in a concentrated region and their significant values. If a hail event comes through, it can do extensive damage to just about all of the properties listed on a public entity schedule, with losses and deductibles adding up very quickly.
"Carriers vary in how they address covering hail damage for public entities," explains Marty Roche, RPS Area Assistant Vice President. "As the Property insurance market firms and hail losses continue to mount, some carriers have excluded coverage on a public entity's policy or have dramatically increased deductible amounts - up to 5% in some cases, particularly in catastrophe-prone areas.
"Other carriers will include hail coverage on the entity's buildings but exclude coverage on its vehicles. Stand-alone policy options are available to insure vehicles against hail while they are parked, non-operational and in a covered location. If you have a large concentration of vehicles in one area and a hailstorm occurs, the loss could be sizeable."
What Carriers are Looking At
Carriers are evaluating their portfolios for hail events and their impact on underwriting profitability. Underwriters are paying close attention to the age of the buildings and the condition of the roofs when a great deal of damage occurs.
"If a broker can provide detailed information to an underwriter about the structural integrity of the public entity's properties including its roofs, this will help in making a carrier more comfortable in writing the wind and hail coverage," says Roche.
Reducing Hail-Driven Insurance Expenses
To offset some of the increased costs, insureds are seeing there are deductible buy-down policies available for wind and hail.
"For example, the primary Property policy may come with a 5% deductible for hail, but an insured only wants to pay 2%. The insured can purchase a deductible buy-down policy with another carrier," says Roche. "This policy will pay the difference once the 2% deductible is satisfied, reducing the insured's out-of-pocket expenses in the event of a loss."
RPS provides creative solutions for public entities along with hail insurance options to properly protect their buildings and vehicles.