Sustainable Advice for Businesses Facing Snow Damage Demands

Last week, a storm dumped heavy snow in Alberta, Canada, damaging many vehicles and dropping hailstones that could be as large as grapefruits. Although the rocks were known, the storm was not exactly rare—indeed, hail is becoming a more common and costly natural hazard around the world. In 2020, Aon’s Global Catastrophe Recap identified snow damage from hurricanes as the driver of one of Canada’s lowest-cost projects ever. In 2021, insurers faced billions of dollars in losses due to severe storms in the United States, with the largest losses resulting from snow that affected the Plains, Midwest, Southeast and Northeast.

“People’s perception is that hurricanes drive the majority of annual costs,” said Steve Bowen, managing director and chief disaster forecaster for Aon’s Impact Forecasting group. “The reality is that heavy snow often causes a lot of damage from storms in North America every year.”

Moreover, it is not only North America that is facing this danger, because the snow also destroyed the most recent events in other parts of Europe last year, which hit Australia yesterday, and NOAA reports China, Russia, India and Northern Italy both are prone to snow damage.

As companies evaluate their preparedness for natural disasters, there are certain steps that should be taken to keep the snow out of organizations that are in a good position to obtain any insurance. Most commercial insurance policies have a rule that any lawsuit against the insured must be filed within one year of the “beginning of the loss,” otherwise it is prohibited. In other words, the date of “loss” begins one year. The question is, when is that day? The Wisconsin Supreme Court addressed this issue directly in the case of Borgen v. Economy Preferred Ins. Co. In this 1993 opinion, the court ruled that the term “hail damage” in reference to hail damage actually means “the day of the hail storm,” not “the day I found the hail damage.”

In 2018, 5Th The Circuit Court of Appeals took matters a step further Other Underwriters at Lloyd’s of London v. Lowen Valley View, LLC In that case, a hotel sued its insurance company for refusing to cover hail damage to its roof using commercial property insurance. The 5Th The Circuit agreed with the insurer’s argument that: 1) there had been several snowfalls near the hotel a few years earlier that he claimed; 2) only one storm occurred within the relevant time period; and 3) the record lacked reliable evidence to allow the jury to determine which of those storms, alone or in combination, caused the damage to the hotel. The 5Th The Circuit also rejected the hotel’s engineering report, which said the storm was “the cause of the damage,” as insufficient.

Taken together, these decisions can blindside businesses who believe their insurance is only responsible for snow.

Let’s say you do business in Plano, Texas, and you have a business policy with a renewal date of January 1, 2022. You’ve noticed the most recent leak in your roof over the past eight years. Based on your findings, you ask the roofer to do more research. You learn that the roof needs to be replaced due to hail damage, so you give notice to the insurance agent. Now, consider Plano at least 11 it snowed since your roof was installed, according to StormerSite:

Day of Storm Min. Size Size Range (Max)
11/10/2021 1.00”
4/23/2021 1.00” (up to 2.00”)
5/18/2019 1.00”
3/24/2019 1.25” (up to 1.75”)
6/6/2018 1.00”
4/6/2018 1.50” (up to 2.00”)
4/21/2017 1.75”
4/11/2016 1.50” (up to 2.50”)
3/23/2016 1.25” (up to 2.00”)
4/27/2014 1.25”
4/3/2014 1.75”

Depending on the A palace If, the appropriate “loss trigger” date would be the most recent storm on November 10, 2021, and any other storms before that. This may mean that any claims made on or before May 18, 2019 may be time-barred, assuming your previous insurance policies have the one-year time limit listed above. Considering how much snow has fallen over the past eight years, you’ll probably have an uphill battle. Lowen Valley View Estate stating that the recent hurricanes of April 2021 and November 2021 were destroyed because of your current policy.

Even if it were possible to assign each item of roof damage to a particular hailstorm—and in addition to the fact that the statute of limitations would not limit the average recovery—the intensity of the storm presents another problem. With 11 storms happening on your roof, the insurance agent may argue that it means 11 different events, which means you have to go through 11 different deductibles before you see a single insurance dollar. Depending on the amount of your deductible, this means that recovery is not possible as a practical matter.

Read together, the rulings place the responsibility on business owners in areas at risk of hail damage to conduct at least an annual inspection to determine if there is any roof damage that could be covered by a particular insurance policy. It also places the onus on business owners to understand how to obtain insurance, including seeking payment agreements to extend the filing period.

Risk Management Magazine and Risk Management Monitor. Copyright 2022 Risk and Insurance Management Society, Inc. All rights reserved.National Law Review, Volume XII, Number 227