As more instances of severe weather and the resulting litigation occur, coupled with an ever-increasing rate of repair costs, an emerging issue has begun to impact commercial business owners as they work to secure insurance – the remaining service life and integrity of roofs.
According to the Insurance Information Institute (III), across the U.S. in 2023, insurers lost $79 billion due to natural catastrophes like storms, flooding, droughts, heat waves, and wildfires. A heightened level of attention among insurance providers to the roofs of commercial buildings has been one result.
III states that if a roof is more than 20 years old when the owner applies for business insurance, most insurance companies will require an inspection, while other companies may decline coverage for this or a number of other factors. Insurers can’t deny coverage concerning the roof if that roof is less than 15 years old, but if it’s more than that threshold, the owner can get an inspector to certify that the roof has at least five more years of service left. With an acceptable roof certification, the insurer will likely provide coverage unless there are concerns with other elements of the property or the overall application.
One option gaining attention features offering insurance that only covers the building’s actual cash value, rather than covering the replacement cost value offered in typical insurance policies. Actual cash value factors in the cost of depreciation in the final payout, and may be less than the total cost to replace the roof.
Some insurers are reducing coverage for buildings that require costly upgrades, such as roof replacements, before they agree to issue a policy, according to III. Some are pulling out of areas prone to severe weather entirely, like California and Florida in particular. Mid-Atlantic states like Pennsylvania have not experienced the same levels of damaging weather or wildfires to date, but being aware of these trends is always a wise strategy.
Contact the professionals at Evergreen for more information.
