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Hail storm of home insurance claims

By Jay MacDonald · Bankrate.com
Friday, July 19, 2013
Posted: 6 am ET

While dramatic made-for-TV weather events such as East Coast heat waves, Midwest tornadoes and the runaway wildfires out West have come to dominate the nightly news, and the TV creation "Sharknado" has been dominating Twitter, storms bearing those relatively innocent-looking balls of hail have been rat-a-tat-tatting up sizable home insurance claims recently.

On Wednesday, the National Insurance Crime Bureau reported that insurance claims relating to hail damage jumped 84 percent between 2010 and 2012, from about 467,600 claims in 2010 to around 861,600 in 2012. In all, more than 2 million hail-related claims were processed during those three years, ranging from minor roof damage to complete building collapse.

Texas is tops in hail damage

Texas led the nation in hail claims for the period with 320,823, followed by Missouri (138,857), Kansas (126,490), Colorado (118,118) and Oklahoma (114,168). Alaska led the nation in fewest hail-related claims for the period with 21, followed by Washington, D.C. (39), Maine (69), Rhode Island (101) and Vermont (109).

What exactly is the National Insurance Crime Bureau's interest in hail, which at last check remains legal in all 50 states? For starters, the NICB tracks the number of questionable claims, or QCs, flagged by home insurance companies as possibly fraudulent. Of the 3,829 total hail-related QCs identified for the 2010-2012 period, Texas again led the way with 1,053, followed by Illinois (501), Colorado (312), Arizona (214) and Oklahoma (190).

A hail of an issue

The NICB also works to educate consumers about the risks from unscrupulous roofing contractors who often follow in the wake of a major storm, some even posing as repairmen sent by the homeowner's insurance company. Once they get their hands on a cash advance, they're gone with the wind.

"That's why NICB reminds consumers to always check first with their insurance company before signing any documents presented by a contractor whom you did not request to appear. It's why we say, 'If you didn't request it, reject it,'" says the NICB.

The jump in hail-related claims may not have led the nightly news but it certainly captured the attention of home insurers. Several major companies have recently revised their home policies to include "actual cash value" roof coverage, which allows them to depreciate the cost of a roof based on its age rather than pay the full replacement cost.

No doubt the hard evidence of hail's growing price tag is one of the factors leading home insurers to rewrite the rules of roof underwriting.

Follow me on Twitter: @omnisaurus

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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