Homeowners policies continue to change. Insurance companies have been changing their coverages, increasing rates, and just making things challenging. Your policy may be one of those with significant changes. Has your deductible changed? Do you now have a Wind/Hail Deductible? Is there a new endorsement on your policy that states you will experience a Limited Loss Settlement? If you don’t know you need to look at your policy.
As severe storms continue to increase in frequency and severity, roofs have become a hot button. Insurance companies have been researching the capability of the shingles we use on our roofs as they begin to age. The 25-year shingle appears to be a myth. The tornados, large hail, and high winds we experience now show that shingles start to lose their effectiveness around year 10. After 10 the roof materials will become less effective.
Insurance companies are also fighting a culture shift. Some insurance agents, myself included, would say a problem they created for themselves. But I digress. Insurance policies were on a trend for decades becoming more and more comprehensive. It seemed almost anything that might damage a home would be covered without much investigation. And over time homeowners got used to using their policy more frequently. A hailstorm became a great opportunity to upgrade the roof on the insurance company’s dime. If the roof is old and needs replaced, don’t save up and do it yourself. Wait until the next hailstorm. Insurance wasn’t designed for that. So, we are at a crossroads. Do we continue to use our insurance policy more like a home maintenance policy and continue to see the premiums rise? Or do we go back to using our insurance policy as a catastrophic policy? Only using insurance when the unthinkable happens and we have a significant loss. The insurance companies are starting to make that decision for us.
Since 2023, my agency, Mansfield Insurance Agency, who represents twelve insurance carriers, has been managing new updates to homeowners insurance. One of the biggest changes is roof age as a rating variable. Insurance carriers are tracking roof ages. Adding surcharges in the policy for those homes whose roofs are 10 years or older. Or placing larger percentage deductibles for damage caused by Wind or Hail. Many companies have now added a Limited Loss Settlement endorsement as the roof ages. Some companies add this at roof age 10. Some add it at roof age 15 or roof age 20. The Limited Loss Settlement endorsement creates a payment schedule for losses that occur due to a Windstorm or Hailstorm. It provides a table that shows what percentage a policy will pay based on the age of your roof. This table will be provided in your policy if this endorsement applies. All these changes may be in your policy now and if you have questions you need to have a conversation with your agent.
If we as insurance consumers can work ourselves to look at insurance for catastrophic losses. Rates will fall. But it will be on the homeowner to maintenance their home and replace their roof when needed. Insurance at the most elementary of design is to put the policy holder back to the condition they were in before the damage occurred, not put them in a better position. Somewhere along the road that attitude changed. With the deductible changes and the use of Limited Loss Settlements insurance companies hope to again have homeowners handle the maintenance of their homes. The insurance companies will handle the catastrophic items.
Matthew Hatoway is a second-generation insurance agency owner. He and his family run Hatoway Insurance Partners, which owns Mansfield Insurance Agency. Knowledge, Care, Protection is their motto and they live that in every client relationship.
