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Hail Damage Claims for Vehicles Spiking

Insurers made increasingly higher payouts for hail damage to vehicles in three of the four years ending with 2014 than in the earlier three years of a seven-year study completed by the Highway Loss Data Institute.

by Staff
June 13, 2016
Hail Damage Claims for Vehicles Spiking

Photo courtesy of HLDI.

3 min to read


Photo courtesy of HLDI.

Insurers made increasingly higher payouts for hail damage to vehicles in three of the four years ending with 2014 than in the earlier three years of a seven-year study completed by the Highway Loss Data Institute.

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Members of the institute's database paid $5.37 billion for hail-related claims between 2008 and 2014, the insurance industry organization announced.

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The biggest payouts were in 2014 ($968.9 million) and 2011 ($948.3 million), HLDI reported. But the actual payout by all insurers is likely higher and estimated to be $7.26 billion, including $1.33 billion in 2014 and $1.28 billion in 2011. This estimated total takes into account that not all companies are represented in HLDI's database, and not all data suppliers submit weather information, HLDI said.

The hail claims data are from the 31 companies that specify weather as a cause of loss when supplying information to HLDI. These companies’ exposure represents 87% of the comprehensive coverage exposure in HLDI’s database. Results for the latest analysis were based on more than 491 million insured vehicle years and more than 1.5 million claims. Losses were concentrated in the country’s midsection.

HLDI has been studying the frequency, severity, and cost of these claims for several years. Using information from insurers about weather-related losses under comprehensive coverage, HLDI analysts matched the dates of those claims to hail events recorded by the National Oceanic and Atmospheric Administration to determine which vehicle claims were for hail damage.

The analysis excluded any hailstorms that accompanied tornadoes since it isn't possible using HLDI’s data to determine which weather event caused the damage that led to the claim. Motorcycle claims also were excluded.

Source: HLDI

The results showed a frequency of 3.2 claims per 1,000 insured vehicle years during 2008-2014, a claim severity of $3,428, and overall losses of $11 per insured vehicle year. Across the study period, 2011 had the highest claim frequency of 4.3, while 2014 had the highest claim severity at $4,169 and overall loss at $15 per insured vehicle year.

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The states with the highest claim frequencies during 2008-2014 were South Dakota (26.5), Nebraska (19.1), Oklahoma (18.4) and Kansas (16.5). Other states in the top 10, by order, were Wyoming (15.2), Montana (11.8), Colorado (10), Missouri (9.3), Iowa (7.6), and Texas (6.7).

“HLDI periodically does studies to document the effects of weather on insurance losses,” said Matt Moore, HLDI vice president. “Hail storms can be devastating events for vehicle owners. Given the recent news from Texas, as soon as the final numbers are available, we will be updating this study.”

So far in 2016, severe thunderstorms have pummeled Texas, Kansas, Missouri, and Oklahoma with large hailstones. Vehicle damage estimates for three springtime Texas storms alone top $1 billion, according to the Insurance Council of Texas. Some of these losses may be due to other weather factors, such as high winds.

“2011 and 2014 were bad years for hail storms, but it looks like 2016 may be worse,” Moore said.

Although Great Plains and Midwestern states predominate HLDI’s hail claims’ list, the most extreme hail events often occur in other regions. This was the case in five of the seven years examined. While it’s true that spring is prime time for destructive hail events, HLDI analysts uncovered another outlier.

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During the study period, the worst hail storm measured by vehicle insurance losses occurred in the fall in the Southwest. Vehicle damage from the Oct. 5, 2010, Arizona storm was concentrated in three counties: Gila, Maricopa, and Yavapai. Of the three counties, Maricopa had the highest hail-loss tally for the day, with nearly 39,000 claims and more than $157 million in payments, according to HLDI.

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