HISTORICAL WEATHER PATTERNS AND RISK: WHAT HOMEOWNERS NEED TO KNOW

Written by Ryan Hanley

It’s only been about 60 years since the insurance industry has been calculating risk related to weather, weather patterns and natural disasters. Prior to these new actuarial calculations, fire policy was the only natural disaster policy in place. The first major movement in the field was wind and hail, which remains the largest policy focus related to weather.

 While calculating risk related to weather patterns has been a rather steady, accurate industry for some time, climate change has made this a more challenging endeavor in recent years. Policy details have been adjusted and regional considerations have come into play even more. Choosing the best homeowner’s policy with the appropriate risk assessment depends on a number of factors, including location, policy coverage options and what certain regions offer.

Factors that Impact Weather-Related Insurance Policies

Number of Homeowners. One of the biggest changes to weather-related insurance policies is the sheer number of homeowners nationwide. There are more people, meaning there are more homes in all regions of the country. Thus, more homes are in coastal regions, tornado alley and other areas of the country with their own specific weather patterns and risks. Take, for example, Hurricane Ike in 2008, the first hurricane to directly impact Houston since 1983. The difference between the number of homes in the region from 1983 to 2008 severely impacted the insurance industry.

This influx of new property has changed the insurance game, and some areas have more exclusions and options when it comes to purchasing hail, wind or other natural disaster coverage. The best thing to do, when it comes to homeowners insurance and weather-related disasters, is to pick a policy with standard coverage (coverage without “carve outs” for certain things). For example, some policies have hail damage coverage, but they have a “carve out” for roof damage caused by hail. Avoid these if you are in an area prone to hail damage.

Living in a coastal state. Coastal states in the southeast – Mississippi, Florida, the Carolinas and the Gulf region of Texas and Louisiana – are clearly hotbeds for hurricanes and wind damage. These areas of the United States are known as wind-storm zones. Policies in this region have the option of excluding wind damage, because if the option wasn’t available for homeowners, no policies would be sold.

If you exclude the coverage from your standard policy, this region has what is called a “wind storm pool,” a state fund devoted specifically to wind damage. This is where homeowners in the southeast will want to purchase their wind coverage if they so desire. Mississippi, Alabama, North and South Carolina and the coastal region of Texas all have wind-storm pools and the option for coverage; however, Florida does not have wind-storm coverage because the entire state is in a wind zone. Again, no policies would exist in Florida if wind coverage were an option.

Flood insurance. Flood insurance is also another disaster with its own pool in certain areas. However, the flood insurance program is in a state of flux, as they were upended by the overwhelming amount of flood damage caused by Hurricane Katrina in 2005.

Tornado Alley. Another major weather region in the U.S. to take into consideration is Tornado Alley. This is the area in the middle of the country, roughly expanding from North Texas to Kansas, which is susceptible to tornados in the spring and throughout the year. If you are purchasing coverage in this region, there are some options to consider that your agent will go over with you when purchasing insurance.

Preventative Measures

What about reducing damage and preventative measures? There are a handful of things homeowners and builders in certain regions can do (and have done) to preemptively reduce damage and thus not impact their coverage on the back end once disaster strikes.

Installing a metal roof. Roofing has come a long way in the past few decades, but purchasing a 30-year shingle to put on your roof doesn’t necessarily mean the roof is going to last 30 years. This simply means that, if no severe weather impacts the roof (like hail), then they will last 30 years. But where in the country will a roof not be affected by hail, or wind, or heavy rains, or snow and ice?

One alternative for shingle roofing is a metal roof. It may cost more on the front end, but metal roofs will sustain severe weather damage and last much longer. There may be cosmetic damage, which you can exclude from your policy, but the roof itself will not leak or tear away from the home.

Homebuilding improvements. Some preventative measures have also been taken when it comes to homebuilding. The placement and size of windows, the anchoring of the roof to the structure and the foundation anchoring have all been improved to help reduce damage. Certain areas of the country susceptible to wind damage have also moved away from sliding glass doors, Areas prone to flood damage have increased the elevation of their new structures. These are all things homeowners can take into consideration when shopping for a new house.

Overall, the best plan for homeowners when it comes to securing homeowner’s insurance is to try and reduce the number of exclusions and limitations in their policy, and get weather-related coverage that will benefit them depending on what region of the country they live in.