Roof age and hail deductibles: what changes the number

Two quotes for the same building can carry nearly the same premium and pay very different amounts after the same hailstorm. The difference seldom sits in the rate. It sits in three terms printed further down the quote: the wind and hail deductible, the basis on which the roof is settled, and whether cosmetic damage is covered at all. The age of the roof reaches into all three.

In Kansas, where hail and tornado are routine, those three terms are exactly where two otherwise similar quotes differ, and comparing premium without comparing them is how owners end up surprised at claim time. This guide explains each term, how roof age moves it, and how to read a quote so the figure you compare is the one a claim would pay.

Where the hail terms have tightened

Hail is regional, and so are the terms carriers use against it. Across a band of states from Texas to Montana, repeated hail losses have been answered mainly through policy terms. In Texas, Missouri, Nebraska and South Dakota the pressure shows up in the terms more than in whether a carrier will quote at all, which keeps capacity available while moving retained risk onto the owner.

• Colorado is the most hail exposed state in the country for insured loss, and a commercial roof on the Front Range is underwritten on the assumption that it will be hit. Front Range hail and roof settlement terms now include percentage deductibles, cosmetic damage exclusions and actual cash value settlement on roofs, alongside non-renewals and tighter roof requirements.
• Oklahoma, Kansas and Missouri see the same three terms, with actual cash value settlement on older roofs in Kansas and Oklahoma. Oklahoma City's repeated hail drives the majority of commercial property loss there.
• Nebraska and South Dakota run percentage deductibles, cosmetic exclusions and roof settlement terms as standard, and South Dakota's record-setting hail includes the largest hailstone ever recovered in the United States.
• Minnesota carriers apply roof age thresholds and percentage deductibles on exposed schedules, with pricing pressure concentrated on older roofs on habitational property in the Twin Cities metro.
• Iowa still shows the August 2020 derecho in its wind and hail deductible structures and in how carriers underwrite commercial roofs.
• Eastern Montana and southeastern Wyoming, around Billings and Cheyenne, carry percentage deductibles and roof scrutiny as standard.

Much of the middle and east works differently. Flat dollar deductibles are common in Ohio, Indiana, Illinois, Michigan, Pennsylvania, Wisconsin and Tennessee, and in Arizona and Nevada. A roof in those states still matters to underwriters, but it shows up more in price and eligibility than in a deductible that scales with the building.

Flat and percentage deductibles, in dollars

A flat deductible is a fixed amount taken off each occurrence. A percentage deductible is a share of insured value, and on the standard windstorm or hail percentage wording it is worked out separately for each building that is damaged, using that building's limit, or its value on the statement of values when the buildings share a blanket limit.

The effect is easiest to see with round numbers. For illustration, take a campus of four buildings, each insured for five million dollars, under a two percent wind and hail deductible. A storm that damages all four roofs brings four deductibles of one hundred thousand dollars each, so the owner keeps the first four hundred thousand dollars of the loss. Under a flat deductible applied per occurrence, the same storm is one deductible. The percentage looks small on the quote and can turn out to be the owner's largest cost in the claim, which is why every percentage should be converted to dollars, building by building, before a program is chosen.

Financed property adds a second test. Fannie Mae, Freddie Mac and HUD cap wind and hail deductibles as a percentage of insured value on the multifamily and senior housing loans they back, and the percentage deductibles now common in Colorado, Kansas, Oklahoma, Nebraska and South Dakota routinely exceed those caps. A deductible accepted to bring the premium down can put the borrower out of compliance with the loan.

Roof age and the settlement basis

A replacement cost policy pays to repair or replace with materials of like kind and quality, without a deduction for age. Actual cash value takes depreciation off first, and on a roof well into its life the depreciation can be most of the claim. Carriers in the hail states increasingly apply actual cash value to the roof alone once it passes a stated age, even when the rest of the building is written at replacement cost.

ISO publishes a standard endorsement for this, limiting coverage for roof surfacing: the shingles, tiles, metal panels or membrane on the roof and the materials that fasten them and keep water out. The endorsement lets a carrier settle roof surfacing at actual cash value, exclude cosmetic wind and hail damage to it, or both. Carriers also write their own versions, so the wording on each quote is what counts.

Two points follow. First, replacement cost itself is paid in stages: the carrier pays actual cash value first and releases the withheld depreciation once the roof is actually replaced, so the owner funds the gap for a while either way. Second, lenders generally expect replacement cost, and in Colorado, Kansas, Missouri and Oklahoma an actual cash value roof term conflicts with agency and HUD requirements in the same way an oversized deductible does.

Cosmetic damage exclusions

A cosmetic exclusion removes cover for hail damage that changes how a surface looks without affecting how it works. The usual case is dented metal roofing that still sheds water. An adjuster applying the exclusion pays for punctures and cracked seams that let water in, and nothing for a metal roof dented from edge to edge that is still dry.

The exclusion matters most where there is a lot of exposed metal. Standing seam roofs, canopies, metal wall panels and rooftop equipment housings all dent before they leak. Car wash sites with canopies and vacuum stations are an obvious case, and so is any campus that chose metal roofing for its long life.

On a senior living campus

Senior living communities combine several of the pressures above. A campus is usually several buildings with large insured values, so a percentage deductible calculated building by building can run many times the flat deductible for all other perils. A community financed through the agencies or HUD brings the deductible caps and the replacement cost expectation into every renewal. And a damaged roof over resident rooms is harder to live with than one over a warehouse, because residents cannot simply be moved: the cost of relocating them and keeping care going belongs in the program before the storm, as our guide to insuring senior living communities explains.

What moves the terms back toward the owner

Better roof information widens the market and can improve settlement terms. What helps most:

• Roof detail by building. Material, deck type and the year each roof was replaced. A schedule without roof years is priced on the worst assumption.
• Impact rated roofing. Minnesota underwriters show interest in impact rated roofing on anything recently replaced, and a new installation should be documented with the product and the date.
• Newer roofs and a clean history. In Texas, a well documented submission with a newer roof and a clean loss history still draws multiple quotes. In Florida, where roof age drives availability, properties with newer roofs and documented wind mitigation are seeing real competition at renewal.
• Photographs taken before the season. Adjusters often argue that damage is wear rather than new hail. Dated photographs and inspection reports of each roof, taken before hail season, answer that argument better than anything assembled after a storm.

Reading two quotes side by side

When quotes come back, line them up on these terms before looking at the premium:

1. The wind and hail deductible for each building, converted to dollars, and the total for a storm that crosses the whole schedule.
2. Whether that deductible applies per building or per occurrence.
3. The settlement basis for roofs, and the roof age at which it changes to actual cash value.
4. Any cosmetic exclusion, and which surfaces it reaches.
5. The deductible percentage and roof settlement basis the loan documents allow.

In a state whose valued policy law reaches windstorm, the statute fixes the payment on a total loss while the percentage deductible still comes off it, a pairing covered in our guide to valued policy statutes state by state. The deductible is only half of the arithmetic; the other half is whether the building limit is right in the first place, which is where checking values at renewal comes in. And for how a hail claim is adjusted under the standard form, from the notice of loss to the appraisal clause, see commercial property coverage and how claims are paid.