Change can be good. Change can be hard. Change isn't always a bad thing. Change is inevitable.
Inflation, storms, and claims are forcing insurance companies to reevaluate their policies, premiums, and deductible options and thus... make changes. The changes that companies are making affect all their customers. Regardless of whether you personally experienced weather related claims over the last year, much of the state did. For many companies, 2022 was one of the most expensive storm seasons in history.
The result is change. The easiest change insurance companies make is the premium rate. It's easy to understand... lots of claims... premiums go up. The next easiest change is to the policy deductible options. Higher deductibles mean insurance companies aren't paying for smaller claims and the insured is sharing the expense of larger claims.
The changes that are the most difficult to understand are policy changes. Most companies already have a split deductible with separate deductible for wind and hail claims vs. any other type of claim. Mandatory higher wind and hail deductibles are becoming an industry standard. Some insurance companies are also changing how property is covered by adding a cosmetic loss exclusion on exterior metal surfaces: gutter systems, metal siding components, metal door components, metal window components. This damage may be called marring by some companies.
What does this mean? In a nutshell, the insurance company will not pay for damage that is appearance only. For example, hail puts dents in the metal wraps around the window, but the window still functions properly and there is no need to replace the window.
Why are insurance companies doing this? The window companies are saying that the metal wrap on the windows cannot be replaced without replacing the whole window. However, the window itself is still functioning. The glass is not broken. The elements, cold air, rain, snow, are not getting in but they want to replace the whole window. Rather than changing a few hundred dollars for the piece of metal, they want to sell a whole new window for thousands of dollars. What a win is for them, is not a win for the insurance companies.
There have been customers that have been paid a portion up front for damage to windows and then chose not to replace them because they were still functioning and the mess of replacing the windows wasn't worth it to them. They didn't pay the company back the money they were paid. Win for the insured, but not for the insurance company.
Think of it this way, your thirteen-year-old daughter (or granddaughter or niece) is painting their fingernails on your coffee table. She has a magazine under her hand like you told her to, but accidentally a small drop of fingernail polish is left on the table. You try to get it off but if you scrub too hard or use polish remover, you are going to ruin the finish on the table. Irritating... yes but are you going to get rid of the table? Probably not. The one small pink paint drop does not hurt the function of the table therefore it is not worth spending several hundred dollars to buy a new one.
The insurance companies are viewing cosmetic loss the same way. Why "fix" something that isn't really "broken"? In addition to the extra expense of paying to replace items that are still functioning as they were designed, there would be a lot of added unnecessary waste entering our landfills.
There are endorsements that may be offered that will remove exclusions if the appearance is important to you. However, there will be an additional premium charge.
We know change is hard. As policies are being renewed, we are sending out letters to our customers highlighting any changes that are being made to coverage. Please take a few moments to review this letter. Stop in or give us a call if you would like to discuss your coverage or any options that may be available.
- Kathy, Kristen, Allisa & Sara Jo