OAI: More Hail Damage Claims Show Value of Comprehensive Auto Insurance

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Wide range of areas in the U.S. showed high numbers of claim frequency, payouts in 2011

A recent analysis from the Highway Loss Data Institute (HLDI) showed that the frequency of hail-related insurance claim payments rose in 2011 compared with each of the preceding three years, highlighting the importance of comprehensive coverage in a wide range of areas in the U.S. and the potential destructiveness of hailstorms, according to Online Auto Insurance.

A total of $797 million in hail-related claim payments were made in 2011, the highest of the past four years. Claim payments totaled $536 million in 2010, $527 million in 2009 and $471 million in 2008.

Payments for hail-related car damage account for “a sizable portion” of all comprehensive coverage losses, according to HLDI.

The analysis also identified locations that experienced severe hail incurring the highest dollar amounts in claim damage, finding that those storms aren’t exclusive to one place but that when they hit, they can hit hard.

One of the most expensive days related to hail damage claims, according to the four-year analysis, was on March 25, 2009, when hailstorms struck Texas and Louisiana. During that storm, Texas’ Williamson and Travis counties produced about 22,000 claims and $81 million in total payments. Policyholders in those areas seeking financial protection can search for Texas car insurance and purchase comprehensive coverage that covers weather-related damage.

In fact, policyholders in any area with possible hail may want to consider getting the optional form of coverage so they are not caught unprotected when the unpredictable disasters strike. The HLDI analysis found that, from 2008 to 2011, South Dakota, Oklahoma, Wyoming, Kansas and Nebraska had some of the highest frequencies of hail-related claims.

A single hail-involved event can have wide impact. April 9 was the day with the highest number of hail-related insurance claims and payments in 2011, according to the analysis, which found that hailstorms that day raked counties across seven states, including South Carolina, North Carolina, Tennessee, West Virginia and Virginia. The county racking up the highest number of claims was South Carolina’s York County, which saw 6,000 claims and $18 million in payments from hail that day.

States that were in the top 10 in claim frequency each of the past four years were South Dakota, Nebraska and Oklahoma. Recent inclement weather brought softball-sized hail to Oklahoma on May 29 and caused widespread damage, according to media reports.

On the other hand, Alaska, Hawaii, Idaho and Washington have shown consistently low numbers of hail-related claims, according to HLDI.

Comprehensive coverage is optional, but is the only type that covers weather-related damages. About 75 percent of policies written by insurers included comprehensive coverage in 2009, according to data from the National Association of Insurance Commissioners (NAIC). NAIC data also show that in 2009 the average premium for comprehensive coverage was about $130. Premiums vary depending on several factors including the vehicle covered and deductible amount.

Consumers can raise their deductible to reduce coverage costs if comprehensive coverage's price tag is too high for them, although those consumers subsequently pay larger portions of the claims they file. According to one industry group, raising a deductible from $200 to $500 can cut coverage costs by 15 to 30 percent.

Source: http://publications.usa.gov/USAPubs.php?PubID=3187

For more on this and related insurance issues, head to http://www.onlineautoinsurance.com/texas/ for access to an easy-to-use quote-comparison generator and informative resource pages.

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Charles Nguyen
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