WHY IS HAIL SUCH A PROBLEM FOR YOUR PROPERTY’S ROOFING?
Hail can cause serious damage to your chapter house’s roof. Hail stones are made up of ice and come in a variety of shapes, sizes, and weights, which can all contribute to the destruction of your roof after a hailstorm. The weight of hail stones is also a factor that should be taken into account when considering hail resistant roofing as an option. Hail stones can cause dents, cracks, and even holes in your roof, which will leave it vulnerable to water damage and increased energy costs.
COSMETIC/AESTHETIC DAMAGE VERSUS PHYSICAL DAMAGE TO THE ACTUAL ROOF
The insurance industry has previously been willing to repair and/or replace roofs damaged by hail that are more cosmetic in nature or to match the entire roof’s shingles with the new replaced shingles due to actual hail damage. It is fair in saying that these days may be over.
There continues to be significant shifts in the weather patterns in certain parts of the US with increased wind and hail claims. The industry is seeing an increase in the storms producing conditions of hail and wind. There is an increase in the severity of the storms, thus bringing worse damage and the expanse of the areas affected are expanding more easterly than the past.
With the significant increase in hail and wind losses, all insurance companies are being forced to more closely analyze or underwrite each property risk and are looking at numerous alternatives to encourage more roof risk management. Examples we have seen across the insurance industry include:
• Significant increases in wind and hail deductibles in the wind/hail prone areas
• Limitations and exclusions to roof damage repair and replacement
Hail resistant roofing provides property owners an extra layer of protection against the destructive nature of hail stones, which can cause significant damage to traditional shingles and other roofing materials. It can withstand impacts from hail stones at speeds up to 150 mph, which is far stronger than traditional roofing materials. This extra protection minimizes the need to replace your roof after a hailstorm hits, and an additional advantage of impact-resistance roofing is its energy efficiencies, meaning you could save money on energy bills in the long run.
Unlike traditional roofing materials, impact-resistance shingles are designed to last longer, usually up to fifty years. The costs associated with hail resistant roofing materials will vary based on the resistance rating of the materials. These ratings run from Class 1 (least resistance) to Class 4 (highest resistance). Click here to see the Insurance Institute for Business and Home Safety’s list of shingle performance ratings. Generally, these roofing materials will cost more than the traditional roofing materials, but they also come with the added protection from hailstorms, last longer than traditional roofing shingles, and provide energy efficiencies.
DON’T WAIT FOR A WIND/HAIL CLAIM TO ADDRESS THE CONDITION OF YOUR ROOF
For the property owners in the following states, there has been significant increases in storms attributing to wind and hail claims:
We urge our clients in these states to take additional measures to have a sound risk management plan in place, to upgrade your roofing materials to the impact-resistance shingles when your roof needs to be upgraded, and should you have a claim, consider upgrading to the preferred materials.
ADDITIONAL ROOFING RISK MANAGEMENT
Travelers Insurance Company, who writes your property insurance, has developed an additional resource for you in your roof property management:
This edition of the monthly MJ Sorority newsletter covers the following topics: winter weather preparedness, Greek kitchen design trends webinar, required conditions under the crime policy, cyber security awareness month, and contracts FAQ.
Chubb Insurance, the insurance company who writes your Crime Insurance Coverage, have some basic risk management rules and guidelines for the entities under your organization’s national insurance policy. These conditions are referred to as “required conditions” and list out specific requirements in the financial management to ensure that there is dual control of the financial transactions at all times. Should an embezzlement occur and the dual controls were indeed in place, then the entity would only have to absorb a lower deductible (refer to your Insurance Overview for your organization’s embezzlement limits and deductibles). However, should a claim occur and no dual controls were employed, then the per occurrence deductible would be $150,000 per occurrence.
This requirement by the insurance company hopes to serve two purposes:
- To encourage stronger financial management by all entities of a woman’s fraternity/sorority and
- To be punitive to those who don’t properly manage the exposure.
Maintaining this coverage is extremely critical for our community comprised of primarily volunteer leadership. Thus, the insurance company has placed required conditions on the policy for insureds to qualify for a lower policy retention (deductible). Required Conditions means the Insured Organizations have utilized, prior to the loss sustained, a professional, third party accounting service* to provide the following controls with respect to any Chapter, Local House Corporation or Local Foundation, which will be verified at the time of loss:
- All outgoing electronic payments are subject to segregation of duties between initiation, authorization and release, such that no one individual can control the entire process without oversight by another individual;
- Accounts payable duties are segregated such that no one person can complete a transaction from beginning to end independently under their own authority;
- Monthly bank reconciliation is conducted on all Chapter, Local House Corporation or Local Foundation approved bank accounts by a person that is not authorized to also handle deposits, sign checks or make electronic payments; and
- At least once a month, bank and credit and purchase card accounts are reconciled by a board member or employee other than the board member or employee who is an authorized signatory for such accounts;
- New vendors or any change to existing vendors are approved by a House Corporation board member.
Click here to see claims examples involving embezzlement that might be useful for determining your various exposures to this type of risk.
We are confident that our clients recognize this risk to financial management and have implemented these required conditions as recommended. Should you have additional questions, please consult with your Client Executive at MJ Sorority.
*We have come to understand that this accounting service is generally being utilized, so it likely will not be a change for your operation. The policy requires the chapters/house corporations/local foundations have a professional, third -party accounting service in place at the time of a loss to qualify for the lower deductible should a loss occur. Examples of this would be an accounting firm or one of the accounting service providers in the fraternal community, such as OmegaFi and Billhighway/GreekBill.
The monthly MJ Sorority Newsletter – This issue covers National Preparedness Month (tips for preparing for weather emergencies), things to consider when planning a risky activity, cyber incidents, tips to minimize fraud, and food service trends for Gen Z.
The monthly MJ Sorority Newsletter – This issue covers background checks, event planning resources, rising food costs, summer to do lists & more.
The ruling body for fire safety codes is the National Fire Protection Association (NFPA). This entity determines the fire safety codes and is the recognized standard by which all businesses are to follow.
It is the NFPA that sets the codes for the types of sprinkler systems that must be or can be installed in a building primarily based on its occupancy. In 1896, they developed the first code for systems in residential or habitational type occupancies: NFPA 13.
NFPA 13 is designed to serve two distinct purposes:
- To eliminate the risk of bodily injury or death of residents/guests
- To significantly reduce fire damage to the property and any subsequent water damage from the fire response efforts
The building must be 100% sprinklered including attic space whether accessible or not. The costs to install can be substantial for the following reasons:
- Piping must be steel which is more labor intensive to fabricate.
- Attics must be also be sprinklered.
- Aesthetic work is more substantial with the exposed steel pipes.
For a variety of reasons such as cost and labor, NFPA came out with a modified code in the 1970s for residential housing: NFPA 13R (Residential). The main purpose of this risk management tool was purely the protection of lives, unlike NFPA 13 which also was protecting the physical property.
A criterion for the residential housing was that the structure had to be less than four stories in height. As such, the sorority chapter houses did qualify for 13R status, with the only caveat being the attics were not to be used for any purposes and were to have limited access to the attic space.
When the interest for sprinkler systems began to escalate, we were successful in getting the insurance company to provide substantial credits for a property that met the NFPA 13R code. Even though the primary benefit was life safety or the liability exposure, the insurance company agreed to apply this credit to the property premium due to our rationale, which included the following:
- As generally 57% of the account premium is for the property exposure whereas the liability was only 15% thus the dollar discount was far more substantial
- As an inducement to get the property owners to budget for a sprinkler system
- To support the best risk management tool for life safety of your members, employees and guests
Over the years, we have seen an exposure emerge which has become a challenge, which is that the chapter house attics frequently aren’t sprinklered. Of the six property fires over $100,000 in claim cost, four of them started in the attic, which was unsprinklered and had no other type of fire detection system.
The biggest problem comes from the fact that the fire burns for some time in the attic and/or roof area, and it isn’t until it burns through the attic flooring for the debris to land on the next floor before the sprinkler system is engaged and the fire department is alerted. The second problem then comes when the fire department gets there and has to release far more water than normal to extinguish the fire. Subsequently, you have more of your building damaged by the fire and more water damage in trying to put it out.
The liability insurance company underwriters are still very pleased that there is reduced if not completely eliminated bodily injury exposure, but the property underwriters are growing concerned about the exposure of attic fires.
The obvious solution to this dilemma is to install sprinklers in the attic, but this would be virtually impossible for expense reasons. We have done extensive research on this matter and can reach no other conclusion.
We can however recommend another solution to the fire protection alert delay that presently exists which is the installing of a heat sensor to your existing fire alarm system in the attic space. The fire department gets alerted to a fire much faster than without sensors, and there is ultimately less property damage along with the life safety benefit. For further reading on heat sensors, check out these additional resources.
The monthly MJ Sorority newsletter. This issue covers: increase in cyber incidents, preventing phishing scams, workers’ compensation coverage spotlight, FAQ about MJ approving events, unofficial houses, and two MJ Insurance webinars on data analytics and supply chain challenges.
A self-guided presentation that we recommend all employees review annually to refresh themselves on safety basics.