Ask the Experts: Hail Coverage

How can we lower the cost of hail coverage?

As we all know, hail in Colorado can cause a huge amount of damage. The damage and repairs from hail storms can lead to lost business and service interruptions. In the past five years, we have paid out more than $6 million for losses caused by hail, which includes over $1 million each in 2016 and 2017.

As members of a pool, you share the financial burden of these losses in the form of rate increases. The Pool’s mission includes stable rates, which means avoiding year-to-year spikes. Over the last few years, small increases have not been enough to counter hail losses.

Rather than increase property rates for everyone, in 2016 we added a surcharge to buildings in certain counties where hailstorms are more common. This allowed us to concentrate those costs on hail-prone districts, while not penalizing others. In 2018, we increased that surcharge to 20% due to another surge in hail claims.

If your district has buildings in a county that is in a designated hail zone, there are options to help lessen the cost of the surcharge.

Cosmetic Damage Waiver

The cosmetic damage waiver is an endorsement to your property coverage that says your district will not turn in claims for wind or hail damage to a roof that are only superficial. Scuff marks and dents that do not affect the structural integrity of your building and are not visible by your patrons would not be covered. This endorsement comes with a 10% discount on the hail surcharge.

Hail Deductible

The hail deductible endorsement is a separate deductible that applies only to hail damage. Instead of your normal property deductible, you would pay 2% of the value of the damaged building. If more than one building is damaged by the same hail storm, the deductible will be 2% of the value of all buildings involved. There is a minimum deductible of $5,000 and a maximum of $50,000. This will also give you a 10% discount on the hail surcharge.

Adding both of these endorsements will effectively remove the surcharge completely. Of course, the endorsements won’t stop the hail.

Preventing damage should be your first course of action. Put blankets over cars during hail events, use weather alert apps on your phone, and have good contact procedures with your employees, especially those in the field that need to take cover or protect equipment. Being prepared and having adequate coverage are the best ways to stop these catastrophes from hurting your district.

Reminder: we cannot cover your property if it isn’t specifically scheduled!

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