One of the questions I’ve been asked over the last 8 weeks, is whether or not filing a hail claim will impact a client’s home insurance rate? During March and April Texas has been struck by four major hail storms, three in the Dallas / Fort Worth area and one in San Antonio. Initial estimates for the March hail storms that struck north Texas were a combined $1.3 billion in damages to homes, vehicles, and businesses. The estimated total number of vehicles struck by hail in those two storms alone was 80,000. The storm that hit in early April should push the damage totals for all three north Texas storms close to $2 billion.
Not to be outdone, San Antonio joined in with their own hail storm on April 12 which contained grapefruit size hail measuring up to 4.5 inches across. 110,000 vehicles were struck along with thousands of homes and businesses. Insurance companies estimate damages from that storm at $800 million for homes and businesses and $560 million for vehicles ranking it the costliest hail storm in Texas ever. The total estimated damages from these four storms is $3.36 billion.
The impact on insurance companies has been huge. Allstate announced catastrophe losses at $638 million for March and $827 million for the first quarter of this year. Travelers’ profits were down 17% for the first quarter with much of that impacted by hail claims. While it may be hard for most people to weep for home and car insurance companies, consumers may feel the impact of these losses in a couple of ways over the coming 12 months.
Home Rates: I expect home insurance rates to rise sharply like they did after the 2012 storm that hit the Lakewood area in 2012. Areas that will be affected the most should be Tarrant, Dallas, Denton, Collin, Rockwall, and Bexar counties. Rates could jump 10 to 20% in the hardest hit zip codes.
Deductible Increase: Home insurance companies have been playing with the wind / hail deductible for the past two years. Most companies do offer a 1% deductible, but there have been a few that increased to 1.5% and 2% of the home’s insured value. I was notified on Friday of my first carrier that will increase their deductible for wind and hail coverage to 2% in May. More may follow.
Roof Age Restrictions: I have one home insurance company that automatically defaults to a 1.5% wind / hail deductible if the roof is over 9 years old. Others either won’t write the home or increase the wind / hail deductible for homes with roofs older that 10 or 15 years old. It would not surprise me to see other companies tighten restrictions on homes with older roofs.
Not all companies will implement one or more of these three responses but several will. I just don’t know which ones yet or when those changes will take place. I believe we’ll all feel the pinch of these possible changes, even those individuals and companies who didn’t file a hail claim. That’s one of the reasons we review each client’s renewal every year to see if we can improve on the rate their paying now.
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!