Claims Analysis: Roofs Define Luxury Homes’ Insurability

The insurance industry is facing a significant rise in roof-related claims. The combination of increasingly severe weather events, inflation-driven repair costs and the growing issue of roofing scams has created a perfect storm — one that is straining insurer portfolios and impacting policyholders, particularly those with high-value properties.

In 2022 alone, convective storms (which include hail and wind damage) resulted in $29 billion in roofing claims. For instance, severe convective storms, such as the August Midwest Derecho, caused significant insured losses across the U.S., contributing around $10.9 billion in damages, data from the Insurance Information Institute shows.

These storms have become more frequent and intense, leading to substantial impacts on insurance portfolios, especially for roofing claims. By 2023, I.I.I. data shows the total damage caused by convective storms had nearly doubled to $57 billion, underscoring the escalating challenges faced by both insurers and homeowners.

Those who work to insure high-net-worth individuals know that protecting their homes requires more than standard coverage.

The Perfect Storm of Roof Claims: What’s Driving It?

Several key factors are driving the rise in roof claims. A changing climate leads to more frequent and severe storms, resulting in widespread and costly damage.

Between 2022 and 2023, claims for roof damage from hailstorms saw a significant increase.

One notable spike was reported by State Farm, where their hail claim costs jumped by over $1 billion, reflecting a substantial surge in claims numbers and the inflationary impact on materials and repairs. The number of claims rose by nearly 45,000 during this period, driven by more frequent hail events. Other reports suggest that hailstorm activity, particularly in early 2023, spiked by nearly 74% compared to the previous year, based on data from NOAA .

Roofs covered in asphalt shingles — the most common and affordable roofing material in the U.S. — are particularly vulnerable, especially as they age. Even newer luxury homes aren’t immune, as large roof areas mean higher repair costs when damage does occur.

In one case, a high-net-worth homeowner in Texas faced a claim for nearly $150,000 after a hailstorm left dents in a newly installed asphalt shingle roof.

Nature is taking its toll, but that’s not the only reason rates are climbing. Roofing scams are rising, with unscrupulous contractors encouraging unnecessary or fraudulent claims — sometimes years after a storm. These scams are driving up costs for everyone, affecting insurers and policyholders. For luxury homes, these fraudulent claims can result in non-renewal or roof coverage limitations, leaving them vulnerable.

How Insurers Are Adapting: A Changing Coverage Landscape

The growing strain on insurers has led to adjustments in how roof claims are handled. Underwriters are now more selective about the properties they insure, placing a particular focus on roof condition and age. Policies that once provided full roof replacement coverage without age limits are now subject to depreciation clauses. Roofs older than 15 or 20-plus years may no longer qualify for full replacement, with some policies only covering a percentage of repair costs based on the roof’s age.

Additionally, insurers are using advanced technology to assess roof conditions remotely. Satellites and drones are capturing images of properties, so roofs must look good, because their appearance could directly affect how your home is evaluated.

‘For those working to insure high-net-worth individuals, taking a proactive approach to roof maintenance is no longer optional — it’s a necessity for maintaining insurability.’

In one instance, a high-net-worth client was denied coverage renewal after a drone assessment revealed extensive wear on a 22-year-old roof. The insurer insisted on immediate replacement or refused to renew the policy.

For those working to insure high-net-worth individuals, taking a proactive approach to roof maintenance is no longer optional — it’s a necessity for maintaining insurability. Getting them to invest in Class 4 hail-resistant roofs can reduce the risk of storm damage, potentially lower premiums and ensure smoother claims handling in the future.

A well-maintained roof signals to insurers that they are serious about protecting their home and, by extension, their risk portfolio.

The rise in roof claims has led to significant changes in the insurance industry. By staying ahead of these trends, agents and brokers can better educate and protect their client’s investments and ensure they maintain access to the coverage they need.

As fraudulent claims and roofing scams become more prevalent, advise clients that these practices jeopardize their coverage and drive up costs for everyone. Proactive education and vigilance are vital to safeguarding homes and the health of the insurance market.

Poux is executive vice president of risk management at The Liberty Company Insurance Brokers. He has more than 30 years of experience working with high-net-worth families. Poux has held leadership roles at Chubb, Fireman’s Fund and AIG. He is also a volunteer firefighter. Email: Stephen.Poux@libertycompany.com.

Delaney is CEO and executive director of the Private Risk Management Association. She spent more than 18 years in the industry as head of sales training at AIG before joining PRMA. Her experience includes building a high-net-worth sales school designed to educate brokers on advising clients better.