Auto insurance: Hail damage on the rise

The amount of damage that hail caused to vehicles soared in 2011, even in states that usually aren't prone to hail.

Insurance losses for hail-related damage to vehicles more than doubled last year, compared with the previous three years, according to an analysis by the nonprofit Highway Loss Data Institute. The average claim frequency was 5.9 per 1,000 insured vehicles last year, up from 2.8 in 2010 and 2.9 in 2009. The average cost per claim was $3,256 last year, compared with $3,389 in 2010 and $3,089 in 2009.

Matthew Moore, vice president of the data institute, says: "2011 clearly was a year that was different from the three preceding years. There were more storms. There were states that experienced hail in places where storms normally don’t happen.”

So, does this mean that the price of your auto insurance will skyrocket? The 2011 uptick is not likely to cause a spike in premiums “in the near term,” Moore says, but the premiums could go up “if this trend were to continue.”

Hailstones can shatter windshields, side-view mirrors and headlights, and damage the body of a vehicle.

Hail damage to your car is covered only if your insurance policy includes comprehensive coverage, which most lenders require if you're financing your car but otherwise is optional. People who live in hail-prone areas should evaluate the comprehensive coverage on their cars, Moore says.

The frequency and severity of hail damage varies by state. Hail-related claims primarily come from the central U.S., including Kansas, Nebraska, Oklahoma and Texas, experts say.

However, many of the claims from 2011 surfaced in states that usually don't contend much with hail, such as Wyoming, South Carolina and Louisiana.

Destruction caused by storms in 2011 that produced hail, strong winds and tornadoes "captured the attention of the public and forced many insurance companies to rethink the way they assess natural hazard risk," says Howard Botts, vice president and director of database development at CoreLogic Spatial Solutions, which provides geographic information and analytics.

The increase in hail storms and the changes in where damage occurred in 2011 “called the long-held notion of risk concentration in Tornado Alley into question” and prompted insurers to change how they calculate policyholders' risks. The increase in the frequency and severity of hailstorms in recent years could be attributed to such things as population growth and a population shift to the suburbs, according to CoreLogic.

Another factor that affects the frequency and severity of insurance claims is the use of garages, which prevent hail damage. Urban areas tend to have more cars in garages, while rural areas tend to have more cars “exposed to the elements” in driveways or uncovered parking lots, Moore says.

“If you’re able to park your vehicle under cover during the hail season, that’s a good idea, but obviously that’s not an option for some folks,” Moore says.

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