Justin Kestner and Kevin J. Kennedy | Claims Management | July 21, 2016
Imagine this scenario: You are a claims professional who arrives at a building to evaluate whether or not there is hail damage to a metal roof. After gaining access to the roof, you observe a few shallow dimples in some of the roofing panels when the lighting is just right. No leaks have been reported, and the roof is otherwise unaffected. You recall something once mentioned in a continuing education class about roof damage equating to a loss of service life or water shedding capability. Is this the standard to follow? What does the policy in force say? In other words, how do you determine the existence of damage to a metal roof?
Disagreement over whether a roof has been damaged by hail is not a new issue. However, the past several years have seen a dramatic increase in the number of hail claims that have been filed. The increase in the number of hail claims also has resulted in a few court decisions that address hail damage to metal roofs, so it’s important to understand the basics about metal roofs and the recent development of case law involving damage to metal roofs.
Why Metal?
Metal roofs represent approximately six percent of the low-slope and 38 percent of the steep slope new construction roofing markets by sales dollars, according to the 2014-2015 National Roofing Contractors Association Market Survey. Metal roofs are very hail resistant, which is one reason why they often are installed. Products include raised rib panels (R-panels), standing seam panels, flat panels, and corrugated panels. Flat panels also can be formed into curved or even domed shapes.
Metal roofing products often are protected from corrosion by means of factory-applied galvanized coatings or paint. Some panels may be covered by ceramic granules to give the appearance of an architectural finish. Paint may be factory or field applied to the metal panels. Factory-applied coatings typically are very impact resistant, as they are applied before the panels begin the roll-forming process. Distortion from the rolling process far exceeds distortion induced by hail impact and most foot traffic.
Metal roofing products long have been considered impact-resistant roofing, and many of today’s products tout that characteristic. Products that meet certain standards for impact, such as Underwriters Laboratories 2218 or Factory Mutual 4471, can qualify for insurance premium credits based on their class ratings. Class ratings are based on passing a steel ball impact test.
Understanding Damage
In terms of hail frequency, the National Oceanic Atmospheric Association (NOAA) identified 5,411 severe hailstorms (one-inch diameter or greater) in 2015, and 5,537 in 2014. Total hail events were much greater. NOAA further reports that Texas led the way with 783 severe hail events in 2015. Kansas, Nebraska, Oklahoma, and South Dakota rounded out the top five states. Every state reported at least one severe hail event, except for Alaska and Hawaii.
A 2014 study by Verisk Insurance Solutions entitled, “Property Hail Claims in the United States: 2000-2013,” analyzed hail claims on property insurance policies from 2000-2013. Texas ranked first with an average of over $859 million in annual hail claims payouts. Minnesota was second with an average of over $252 million annually. As noted by the Insurance Information Institute, approximately 70 percent of these claims occurred from 2008 through 2013.
From an engineering perspective, hail with sufficient mass, hardness, and impact energy can dent or rupture (tear) metal roofing materials. As demonstrated in Haag’s 2010 report “Ice Ball Impact Testing of Roofing Materials,” the typical threshold size for hail necessary to rupture metal panels in good to fair condition is at least 2.5 inches. This testing involved perpendicular impacts of frozen solid ice balls—a worst-case scenario—traveling at their freefall velocities.
Hail-caused distortions along panel seams can cause openings that allow water intrusion. Hail impacts at fasteners in unsupported seams sometimes can disengage these fasteners. Ruptured panels, disengaged fasteners, and openings along seams have been considered damage to metal roofing because the water-shedding capability is compromised. Removal of protective coatings by hail (typically field-applied coatings) also occurs on occasion from hail impacts and is considered damage to metal roofing because the service life of the roof is reduced. The question that arises in these situations is the appropriate method of repair or replacement.
Dents, dimples, and dings that do not disengage panels or fasteners or disrupt protective surface coatings are not considered to be damage by many industry professionals because such conditions do not diminish the roof’s ability to shed water or reduce its expected useful service life. (Mere dents on the tops of seams do not constitute a rupture or open seam.) This has become a hotly contested question in a handful of cases due to the coverage implications under many property insurance policies.
What the Courts Say
In Advance Cable Co. LLC v. Cincinnati Ins. Co., the U.S. Court of Appeals for the 7th Circuit addressed the issue of whether cosmetic hail damage to a metal roof constituted “direct physical loss” within the coverage grant of a property insurance policy issued by Cincinnati Insurance Company. The 7th Circuit found that the phrase “direct physical loss,” as used in Cincinnati’s policy, included cosmetic damage.
Not all courts have reached the same conclusion. For example, in Mohr v. American Automobile Ins. Co., the U.S. District Court for the Northern District of Illinois held that a copper roof ridge did not require replacement “given that the ridge is barely visible from the ground, and given that the record contains no evidence suggesting that the dings in the ridge impaired its function or otherwise compromised the structural integrity of the roof.”
In order to clarify policy coverage, some insurance companies now are including a cosmetic damage exclusion or metal roof endorsement in their policies. Such provisions are consistent with the engineering principle that hail dents, dimples, and dings to metal roofs that do not reduce the water shedding capability of the roof or reduce the remaining service life of the roof do not constitute damage.
Because only a few states have weighed in on what constitutes damage to metal roofs, the debate will continue in states that have no legal precedent to follow. Additionally, the above cited decisions may not be the final word on the issue. Different policy language or different policy interpretation arguments may result in varying outcomes in other jurisdictions. In the meantime,it’s important that claims professionals recognize an engineer’s approach to determining damage and consult with a retained engineer early on regarding any policy definitions of “damage” that the insurer will use in determining coverage. That way, the engineer’s report can answer the questions posed by the insurer.
The Engineer’s Role
Regardless of any court decisions that address what constitutes damage to a metal roof, engineers and roofing consultants should remain focused in their investigations on the evidence they see at the site. Any inspection of a metal roof must focus on the basics. First, did hail fall at the site? Second, if hail fell at the site, when did it occur? Third, the size of hail that fell at the site should be documented along with the directionality of the storm and, if possible, a determination should be made regarding whether or not the property was impacted by multiple hailstorms. This can be accomplished by assessing spatter marks (where hail removes oxidation and grime) and dents on various surfaces, including roofing materials, roof appurtenances, fencing, utility boxes, and claddings. Hail typically falls in a defined direction. Thus, one or two sides of a roof typically bear the brunt of a storm. If more than two vertical surfaces of a building are affected, this could indicate that multiple storms impacted the property. Spatter marks will fade with time but may last up to two years depending on exposure and other factors.
Engineers and roof consultants typically focus on what constitutes damage in the roofing industry when evaluating a property. For instance, they should note if the hail impacts dented roofing panels and to what extent. If inspecting experts find dented panels, then they will determine whether it has adversely affected the useful life or the water shedding capability of the roof. This is accomplished by determining if impacts caused panel ruptures, disengaged fasteners, or caused openings along panel seams. If there is evidence of openings engineers, then roof consultants typically will determine if it caused any interior water damage. Further examination includes searching for dented roof appurtenances; dented or fractured siding and/or window trim; broken windows; dented gutters and downspouts; and dented overhead or man doors. Other considerations include separating mechanically caused conditions from hail impacts. For example, dents with scratches in them are indicative of mechanical impact rather than hail impact, as hail is not hard enough to scratch metal. Further, disproportionately large and/or deep dents relative to the size of hail that fell in the area may be indicative of foot traffic or some other cause besides hail.
Engineers and roof consultants are hired to document their observations and render opinions based on their expertise. They do not make coverage decisions because that is always the role of the insurance company and claims professional. As a result, it is critically important that the claims professional consult with the engineer or roof consultant at the early stage of a claim so that their report provides sufficient information for the claims professional to make proper decisions based upon what is considered “damage” in the applicable insurance policy. This is where having a clearly defined scope of work can benefit both parties.
Once damage is determined to exist, reparability of metal roofs can be a complex issue and may require estimates from construction consultants or roofing contractors. Questions sometimes arise regarding whether or not dents have adversely strained the metal. If a dispute lingers over this issue, dented samples of the roof could be removed by a qualified roofer and inspected by a qualified engineer or laboratory professional.
Dating the approximate timeframe of a storm also can be important. In this situation, the engineer should check weather records and inspect the roof for spatter marks coincident with dents to determine if the dents were from a recent storm. Weather service reports by third parties are another tool that can be utilized. An engineer should always look at the weather service reports in conjunction with what can be supported and documented by site conditions.
The debate over what constitutes damage to a metal roof is not going to end any time soon. Courts will continue to weigh in on the issue, and insurance companies will continue to address some of these verdicts by changing or clarifying their policies. As long as metal roofs continue to be installed in hail prone areas, the debate will continue.