Wind and hailstorms can cause significant damage to buildings and homes. Depending on the storm’s severity, repair and replacement costs quickly mount. In the event hail or wind damages your property, insured owners are at a disadvantage if they’re unfamiliar with the standards designed to ensure industry professionals perform high-quality repairs. The same is true if they don’t understand the ins and outs of repair versus replacement decisions during the claims process. In this blog, we discuss the three steps that help determine whether repairs or replacement are more beneficial following a wind or hail claim.
Components of a building envelope
A building envelope is the physical separator between the conditioned and unconditioned environment of a building. Components of the building envelope include the roof system and accessories, the wall system and accessories, insulation, and fenestrations (doors and windows). The envelope must be capable of providing structural integrity, and moisture, air and thermal management.
Hail and wind overview
Hail forms when thunderstorm updrafts are strong enough to carry water droplets well above the freezing level, according to NASA. This frozen water droplet can grow as additional free water contacts the hailstone. When the weight of the hailstone becomes large enough that it cannot be carried by the thunderstorm updrafts, the hailstone falls to the ground. The impact energy of a hailstone is proportional to both its weight and velocity; larger stones travelling at higher velocities have more kinetic energy than smaller stones travelling at lower velocities. The hardest strikes occur when a hailstone impacts a surface that is perpendicular to its trajectory because most of the kinetic energy of the hailstone is transferred to the impacted surface. As the angle of impact becomes oblique, more of the kinetic energy is reserved so that the hailstones skid, skip and/or roll along the impact surfaces before coming to rest. Hail can bruise, puncture or cause loss of granules to asphalt shingles, split wood shakes, fracture tile roofs and vinyl siding, dent metal siding and roof components, and dent or chip paint in stucco siding.
Wind damage commonly results from two mechanisms: direct wind damage (due to wind-induced pressures) or indirect wind damage (due to impacts from wind-borne debris). Direct wind damage to a building envelope generally forms as the deformation, detachment, peeling, displacement, or tearing of components, including the roof covering and wall cladding. Such damage is typically more concentrated along, and propagates from, the corners and edges of a low-slope roof facet and the eaves, hips, rakes, and ridges of a pitched roof facet, as well as wall corners, parapet walls, and roof to wall interfaces. In extreme events, direct wind damage can also result in lateral displacement, racking, or collapse of the structural framing elements. Indirect wind damage typically appears as abrasions, fractures, gouges, punctures, and/or tears in the building envelope that commonly form in roughly linear patterns that are aligned with the direction of the wind as debris moves across the roof and wall surfaces.
What classifies as damage?
Most insurance policies extend coverage for damage to the building envelope due to hail and wind. However, the physical conditions that constitute damage are often not defined in the policy. For example, a common homeowner’s policy may indicate that it pays for “accidental direct physical loss to the property.” The actual conditions that represent a direct physical loss can be undefined, vague, or ambiguous, and terms like ‘functional damage’ and ‘cosmetic damage’ often come into play.
A commonly used engineering definition for damage requires that a building envelope component’s function be altered (such as its ability to shed water) or that its remaining useful service life be reduced. However, these requirements may not align with the intent of the insurance policy.
An adjuster or expert that is inspecting a property for damage due to hail and wind should be provided with some guidance on what physical conditions are considered to be damage under the terms of the insurance policy. Without this guidance, the inspector may be relying on industry accepted definitions of damage, which may or may not align with the intent of the insurance policy.
Repair vs. replace: A three step process
Step 1: Code review
Once hail and wind damage has been confirmed, the process of determining whether to repair or replace the damaged components starts by reviewing local and state building codes. These codes set minimum requirements for how various systems of residential/commercial buildings, which includes the building envelope, should be designed and constructed — safeguarding occupants from dangerous conditions. They can also define specific circumstances under which a repair is permitted, or if replacement is required. Most state and local building codes are based on the International Code Council model building codes, although each jurisdiction often makes local amendments to these codes that must be researched and understood.
Step 2: Determine if the building envelope can be repaired
Once building codes are considered, it’s important to ascertain whether the building components can be repaired. Repairs to building envelopes can be extremely challenging to perform, and the ability to repair a building is subject to the experience, skill and care exercised by the repair contractor. While repairs can seem simplistic in concept, there are many challenges that can arise while executing a repair. These include the availability of suitable repair materials, the age of the building, the extent of damage, and access requirements. In some cases, simply attempting to access a roof to get to the area to be repair can result in damage to the roof covering, which itself then needs to be repaired. This creates a snowball effect in which executing repairs becomes impractical.
The repair process also has an aesthetic component that must be considered. Most building owners do not want a visible repair because of concerns that it can affect the curb appeal or resale value of the property. Some insurance policies also have policies regarding like kind and quality for repairs to address aesthetic considerations. If a certain component of the building envelope, such as roof shingles or tiles, have been discontinued or the color pallet has changed, getting repairs to blend in with adjacent areas may not be practical.
Step 3: Cost analysis
Finally, a cost-benefit analysis is performed. Repairs typically carry a higher unit cost when compared to replacement costs due to inefficiencies in the work and other factors. By comparing the unit costs for repair and replacement, a breakeven point can typically be identified in which replacement becomes more economical compared to repairs. This determination must be made for each component on a case-by-case basis and align with the industry’s universally accepted guidelines.
Some of these concepts were previously shared at the PLRB Property & Liability Resource Bureau Western Regional Adjusters Conference.
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