Roof wind claims are paid at the expense of property insurers and policyholders’ substantial deductibles, although warranty coverage from the roof manufacturer may exist. Despite the generally clear distinction between warranty coverage and insurance coverage, shingle manufacturers have improved their warranties over the past 10 years to extend well beyond the traditional manufacturer’s default warranty that typically offers limited value.
By determining which homes (and businesses) qualify for warranty coverage for shingles, insurers can reduce roof damage compensation and improve policyholder service outcomes.
According to a market analysis, manufacturers representing 80% of the asphalt shingle market offer 15-year non-proportional warranty coverage for wind damage up to 130 mph. Since the vast majority of wind events are below 130 mph, including tropical cyclone activity, the shingle manufacturer’s warranty coverage is relevant for insurers. About three-quarters of all tropical cyclone activity in the United States since 2010 has been Category 2 (96 to 110 mph) or less. A limited number of shingle manufacturers also offer relevant warranty coverage for ice dams.
Almost half of all detached (owner-occupied) single-family homes may be eligible for non-proportional roofing manufacturer warranty coverage for wind-related claims. However, most policyholders are unaware that there is warranty coverage for shingles or keep detailed information about their shingle manufacturer, installation, and warranty. As a result, most policyholders and insurers are unaware of whether there is substantial warranty coverage in the event of loss of property and shingle warranties are overlooked as a source of recovery.
Determine warranty eligibility
While shingle manufacturers are not encouraged to publicize warranty eligibility beyond their general marketing, publicly available data sources exist to determine likely warranty coverage for the name and address. of each policyholder. Manufacturer-specific warranty claim guidelines are also available, as eligibility criteria and coverage differ from one shingle manufacturer to another.
Once the insurer bridges the gap in eligibility and coverage information, each insurer must decide how best to incorporate this new collection option into existing claims practices. A successful integration does not need to disrupt existing practices, operational efficiency and policyholder satisfaction. Options range from simply informing policyholders at the time of a rooftop claim of their warranty eligibility, to facilitating the submission of warranty claims or determining subrogation strategies, if applicable. The results associated with the successful onboarding of an insurer may go beyond savings of policyholders’ deductibles and reduction in claims payouts to include reduced reinsurance expenses. This opportunity therefore deserves to be prioritized.
Rising weather and catastrophe claims continue to weigh on the industry’s bottom line and insurers are running a series of strategies to counter this. In addition to price increases, deductible increases, coverage limitations and underwriting restrictions, insurers have the option of developing shingle manufacturer warranties as a source of recovery.
Joe DiMartino, Ph.D. is Insurance Industry President / CEO, Consultant, Licensed Insurance Agent, Certified Claims Adjudicator and Founder of RoofCovr. He can be contacted at [emailÂ protected]
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