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Storm damage insurance claims are on the rise

June 10, 2024

Thunderstorms are among the most common natural hazards, and the lightning, tornadoes, straight-line winds, hail and torrential rain that stem from these storms often result in substantial property damage and significant economic impacts. In 2023, there were a total of 28 weather and climate disasters, with losses exceeding $1 billion each in the United States. Combined, these disasters cost $93.1 billion.1

While storms are often unpredictable, taking the right preparatory steps can help reduce the potential for expensive damage or even prevent losses, benefiting both policyholders and insurance professionals alike.

Common types of storm damage insurance claims

Hail, strong wind and heavy rain all have the potential to cause significant damage to property. While many homeowners are required to have insurance as part of their mortgage agreement, policyholders may not be aware of how costly storm-related damage is or how their coverage responds to a claim:

  • Hail and wind—Hail and wind damage are leading causes of insurance claims. In 2021, hail and wind accounted for nearly 40% of homeowners insurance claims and had an average payout of $12,913.2 Across the United States, hail is estimated to cause $15 billion of damage to homes, cars and crops each year.3 Hailstones, particularly large ones, can dent or crack roofing shingles, leading to leaks. This is not only costly, but damage from hail can shorten a roof’s effectiveness and lifespan. Hail can also dent or chip the siding and paint of a home, leading to unsightly damage as well as potential water infiltration concerns. What’s more, high winds are common during hailstorms and can tear off shingles or siding or cause debris (e.g., tree branches) to fall on a house and break windows or cause significant structural damage.
  • Water and flood damage—Approximately 29.4% of home insurance claims stem from water damage and freezing.4 During periods of significant rainfall, flooding may occur, which can cause severe damage to homes, buildings, and personal property, resulting in expensive repairs. What many policyholders may not realize is that standard homeowners insurance often won’t cover floods, as these events typically require standalone coverage. It’s worth noting that, in the United States, the National Flood Insurance Program (NFIP) is designed to provide financial assistance to those affected by floods, helping to cover the costs of damages and repairs.
  • Lightning—Annually, lightning-related damage leads to approximately $1 billion in insurance claims. Further, wildfires caused by lighting result in 4 million acres of burned land each year.5 Lightning strikes can cause costly fires, electrical surges, and damage to appliances and electronics.

Why storm damage claims are rising

Insured losses from severe storms are on the rise. Notably, in 2023, insured natural catastrophe losses surpassed $100 billion without a single major event driving up the total. There are a number of possible reasons for this increase in claims, with some experts citing population density as well as increased repair costs as contributing factors.

Cities and areas prone to damage from severe storms are booming, meaning that, in the event of a storm, more property is put in harm’s way. Further, as a result of inflation, the financial implications of a loss are more significant, and it costs more to make policyholders whole following a loss. Insurers are responding by reducing coverage limits and spreading risk across multiple policies, leading to higher overall costs for policyholders.6,7

Tips to help insurance agencies reduce losses from storm damage insurance claims

With the increasing frequency of storm-related losses, it’s crucial to help homeowners prepare for severe weather. Here are some valuable resources and steps insurance agents can provide to policyholders to prepare for a storm and potentially mitigate damage:

Teach your customers basic tips to protect their home from hailHelp customers protect their homes and families from spring storms

Check out these additional resources from Nationwide for policyholders:

    • Before a storm:
      • Review your insurance policy and assess your risks. Review your insurance policy and store your insurance agent’s contact information on your phone. Your insurance agent should be the first call if you experience damage.
      • Consider using FORTIFIED Home, a voluntary construction program, during renovations. Reduce weather risks by incorporating recommendations during renovations and repairs. For example, consider remodeling your roof, as it’s often your home’s first defense against severe weather. While you don’t need to re-roof often, when you do, ask your roofing contractor for a FORTIFIED Roof. FORTIFIED Roof was specifically designed to prevent damage that commonly occurs during high winds, hurricanes, hailstorms, severe thunderstorms, and even tornadoes. Also, ensure you choose shingles rated “good” or “excellent” by IBHS shingle performance ratings.
    • After a storm
      • Document damage. Document any damage incurred by taking photos or videos of affected areas and belongings. Contact your insurance company as soon as possible to report the damage and start the claims process.
      • Keep receipts. Keep receipts for any repairs or expenses related to the storm, as your insurance company may reimburse these.
      • Beware of scams. Be cautious of potential scams or fraudsters posing as contractors or insurance adjusters. Only work with reputable and licensed professionals.
      • Keep documents organized. Keep all relevant documents and communication with your insurance company organized and easily accessible for future reference.
  • Encourage homeowners to review their insurance policies. In addition to sharing information with your customers, you can help them prepare for storms by encouraging them to review their homeowners insurance policies. Customers will want to consider the storm forces they are most likely to experience in their area in light of their current policy selections.
  • Increase efficiency in response to claims. To manage storm damage claims more efficiently, agents should focus on streamlining the First Notice of Loss (FNOL) process. Following a storm, insurers often face an uptick in claims as well as a lack of adjusters to attend to their policyholder’s needs. Given that the severity of damage from a storm varies among policyholders, it’s essential that insurance professionals deploy claims resources strategically. For instance, for those significantly affected by storms, insurers may continue with traditional methods, such as sending adjusters in person. Meanwhile, policyholders who have suffered minor damages can be encouraged to file their claims electronically. This approach not only cuts costs associated with the FNOL process, but also speeds up the response time for more heavily impacted customers.
  • Utilize a triage system for faster scoping. To improve scoping time, consider implementing a triage system that allows for a streamlined review of claims specifics (including the type of loss, severity, location, type of insured and the availability of adjusters). Using this information, insurers can better allocate resources. For example, after assessing and prioritizing a claim, insurers may rely on less experienced adjusters or third-party services for minor claims, reserving more experienced adjusters for complex cases. This approach not only reduces the time and cost involved in scoping, but also ensures that the most appropriate resources are used for each claim.
  • Calculate repair costs with more accuracy. Agents can leverage advanced technology and data analysis to accurately calculate storm damage repair costs. In particular, tools that provide precise measurements of the interior and exterior of a property allow for more consistent claim estimates. Further, by using tools that incorporate local material, labor and equipment costs into repair cost estimates, insurance professionals can provide more realistic and detailed cost breakdowns. By maintaining consistency and accuracy in estimating, insurers can facilitate smoother negotiations and settlements, ultimately reducing the overall loss from storm damage claims.
  • Utilize claim validation technology for quick checks. By integrating geographic information systems (GIS) with claims data, adjusters can quickly validate claims or identify the need for further assessment. Weather verification technology is particularly useful in this way, as it can help prevent fraud and expedite the adjusting process. For example, detailed hail data can indicate the size of hail that occurred at a specific time and location, making claims processing more straightforward.

During a storm infographic.

In addition to sharing information with your customers, you can help them prepare for storms by encouraging them to review their homeowners insurance policies. Customers will want to consider the storm forces they are most likely to experience in their area in light of their current policy selections.

Support you and your customers can count on for storm damage insurance claims

While severe storms can be unpredictable, Nationwide’s support for you and your customers never wavers. Count on us to share valuable insights that may help protect your customers from nature’s wrath and minimize their time to return to normal should storm-related damage occur. Help your customers prepare for severe weather with Nationwide’s weather preparation customer videos and sharing content on the Nationwide Learning Center and the Emergency Preparedness site.