Shingle manufacturer warranties may reduce roof claim indemnity
Nearly one-half of all single-family detached homes may be eligible for non-prorated roofing manufacturer warranty coverage for wind claims.
Roof claims due to wind are being paid at the expense of property insurers and substantial policyholder deductibles, although roofing manufacturer warranty coverage may exist. Despite the generally clear distinction between warranty coverage and insurance coverage, shingle manufacturers have been upgrading their warranties over the past 10 years to extend well beyond the traditional manufacturer’s defect warranty coverage that generally provides limited value.
By determining which homes (and businesses) are eligible for shingle warranty coverage, insurers may reduce roof claim indemnity and improve policyholder service outcomes.
According to market analysis, manufacturers representing 80% of the asphalt shingle market provide 15 years of non-prorated warranty coverage for wind damage up to 130 mph. Since the vast majority of wind events are below 130 mph, including tropical cyclone activity, shingle manufacturer warranty coverage is relevant to insurers. Approximately three-quarters of all U.S. tropical cyclone activity since 2010 has been Category 2 (96 to 110 mph) or lower. A limited number of shingle manufacturers also provide relevant warranty coverage for ice damming.
Nearly one-half of all single-family detached homes (owner-occupied) may be eligible for non-prorated roofing manufacturer warranty coverage for wind claims. However, most policyholders don’t know shingle warranty coverage exists or retain detailed information about their shingle manufacturer, installation and warranty. Therefore, most policyholders and insurers don’t know if substantive warranty coverage exists in the event of a property loss and shingle warranties are overlooked as a source of recovery.
Determining warranty eligibility
While shingle manufacturers have no incentive to publicize warranty eligibility beyond their general marketing, publicly available data sources exist to determine likely warranty coverage for each policyholder’s name and address. Warranty claim guidelines specific to each manufacturer are also available as eligibility criteria and coverage differs across shingle manufacturers.
Once the insurer has closed the information gap on eligibility and coverage, each insurer must decide how to best integrate this new recovery option into existing claim practices. 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 roof claim of their warranty eligibility to facilitating the submission of warranty claims or determining subrogation strategies, as applicable. Results associated with an insurer’s successful integration may span beyond saved policyholder deductibles and reduced claim indemnity to include reduced reinsurance expense, so this opportunity is worthy of prioritization.
The rise in severe weather and catastrophe claims continue to pressure industry financial results and insurers are managing a range of strategies to counteract. In addition to price increases, deductible increases, coverage limitations and underwriting restrictions, insurers have an opportunity to develop shingle manufacturer warranties as a source of recovery.
Joe DiMartino, Ph.D. is an insurance industry president/CEO, consultant, licensed insurance agent, licensed insurance adjuster and the founder of RoofCovr. He may be contacted at hello@roofcovr.com.
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