Key Takeaways
- Nebraska averages 45-60 tornadoes per year, making tornado coverage essential
- Hail causes more property claims than any other peril in Nebraska
- Percentage deductibles for wind/hail range from 1% to 5% of dwelling or building coverage
- Winter storms cause significant damage through frozen pipes, ice dams, and weight of snow
- Producers must clearly disclose all weather-related coverage limitations and deductibles
Severe Weather Insurance Considerations
Nebraska's geographic location creates unique insurance challenges. As a P&C producer, understanding severe weather coverages is essential to properly protecting Nebraska clients.
Nebraska's Severe Weather Profile
Annual Weather Statistics
| Weather Event | Annual Average | Peak Season |
|---|---|---|
| Tornadoes | 45-60 | April - August |
| Severe Hail Events | 50+ | April - July |
| Severe Thunderstorms | 40+ | May - August |
| Winter Storms | 10-15 | November - March |
| Flood Events | Varies | Spring/Summer |
Geographic Risk Zones
| Region | Primary Risks |
|---|---|
| Eastern Nebraska | Tornadoes, severe storms, flooding |
| Central Nebraska | Tornadoes, hail, drought |
| Western Nebraska | Hail, blizzards, wind |
| Platte/Missouri Valleys | Flooding, tornadoes |
| Sandhills | Wildfires, wind, hail |
Tornado Insurance Coverage
What's Covered Under Standard Policies
Standard homeowners and commercial property policies cover tornado damage including:
| Covered Loss | Coverage Type |
|---|---|
| Structural damage | Dwelling/Building coverage |
| Roof damage | Dwelling/Building coverage |
| Broken windows/doors | Dwelling/Building coverage |
| Personal property | Contents coverage |
| Living expenses | Loss of use/ALE |
| Debris removal | Included up to limits |
What's NOT Covered
| Exclusion | Alternative Coverage |
|---|---|
| Flood from tornado rain | Flood insurance (NFIP/private) |
| Earth movement | Earthquake endorsement |
| Vehicles | Auto comprehensive |
| Standing crops | Crop insurance |
| Underground structures | May need endorsement |
Tornado Preparedness Discounts
Some insurers offer discounts for:
- Storm shelters or safe rooms
- Impact-resistant roofing
- Storm shutters
- Whole-house backup generators
Hail Insurance Coverage
Nebraska Hail Exposure
Nebraska ranks among the top states for hail damage claims:
- Large hail (1"+) events common
- Roof and siding damage frequent
- Vehicle damage widespread
- Crop damage significant
Residential Hail Coverage
| Coverage Element | Typical Approach |
|---|---|
| Roof | ACV or RCV (varies by age) |
| Siding | Usually matching coverage |
| Windows | Full replacement |
| Deductible | Often percentage (1-5%) |
Percentage Deductibles Explained
Many Nebraska insurers use percentage deductibles for wind/hail:
Example Calculations:
| Home Value | Deductible % | Deductible Amount |
|---|---|---|
| $200,000 | 1% | $2,000 |
| $200,000 | 2% | $4,000 |
| $300,000 | 2% | $6,000 |
| $400,000 | 5% | $20,000 |
Roof Coverage Issues
| Roof Age | Common Coverage |
|---|---|
| 0-10 years | Full replacement cost |
| 10-15 years | May be RCV or ACV |
| 15+ years | Often ACV only |
| 20+ years | May require inspection |
Exam Tip: Producers must clearly explain percentage deductibles, which can result in significant out-of-pocket costs. A 2% deductible on a $350,000 home is $7,000.
Cosmetic Damage Exclusions
Some policies exclude "cosmetic" hail damage:
- Dents that don't affect function
- Surface damage to metal roofs
- Granule loss without leaks
Disclosure Required: Producers must explain any cosmetic damage exclusions when selling policies with this limitation.
Wind Coverage Considerations
Standard Wind Coverage
Most Nebraska property policies include wind coverage, but with limitations:
- Percentage deductibles common
- Higher deductibles in tornado-prone areas
- Some insurers restrict wind coverage
- Coastal-style exclusions may apply in high-risk zones
Windstorm Deductible Options
| Option | Pros | Cons |
|---|---|---|
| Flat Dollar | Predictable cost | Higher premium |
| 1% Percentage | Moderate savings | $2,000-4,000 exposure |
| 2% Percentage | More savings | $4,000-8,000 exposure |
| 5% Percentage | Significant savings | $10,000-20,000 exposure |
Wind Mitigation Credits
Insurers may offer credits for:
| Mitigation | Typical Credit |
|---|---|
| Hip roof design | 5-10% |
| Impact-resistant shingles | 5-15% |
| Storm shutters | 3-8% |
| Reinforced garage doors | 3-5% |
| Roof-to-wall connectors | 5-10% |
Winter Storm Coverage
Covered Winter Storm Losses
| Peril | Coverage |
|---|---|
| Weight of ice/snow | Usually covered |
| Frozen pipes | Covered if heat maintained |
| Wind-driven snow | Covered |
| Roof collapse | Covered |
| Falling ice | Covered |
Winter Storm Exclusions
| Exclusion | Notes |
|---|---|
| Ice dams (gradual) | May be excluded |
| Vacant homes | Coverage often voided |
| Failure to heat | Excludes frozen pipes if negligent |
| Flood from snowmelt | Requires flood insurance |
Ice Dam Coverage
Ice dams can cause:
- Water backup into home
- Roof damage
- Interior water damage
- Mold development
Coverage varies:
- Sudden damage usually covered
- Gradual damage often excluded
- Proper maintenance expected
Producer Disclosure Requirements
Required Disclosures
Nebraska producers must clearly explain:
| Disclosure | Why Important |
|---|---|
| Percentage deductibles | Can be thousands of dollars |
| Wind/hail limitations | Coverage may be restricted |
| Roof coverage type | ACV vs. RCV significantly different |
| Cosmetic exclusions | May void common claims |
| Flood exclusion | Always requires separate policy |
| Earth movement exclusion | Tornado subsidence not covered |
Best Practices
- Calculate Dollar Amounts - Show clients actual deductible in dollars
- Document Conversations - Keep records of disclosures
- Provide Written Summaries - Give clients written coverage explanation
- Annual Reviews - Reassess coverage as property values change
- Weather Awareness - Update clients before storm seasons
Exam Tip: Failure to properly disclose coverage limitations, especially percentage deductibles and weather-related exclusions, can result in E&O claims against producers.
Claims Handling for Severe Weather
Mass Catastrophe Procedures
After major weather events:
- Insurers activate catastrophe response teams
- Mobile claims units deployed
- Expedited claims processing
- Advance payments available
- Temporary housing assistance
Documentation Requirements
Claimants should:
- Document damage with photos/video
- Create inventory of damaged items
- Keep receipts for emergency repairs
- Obtain multiple repair estimates
- Preserve damaged items for inspection
Approximately how many tornadoes does Nebraska experience in an average year?
Which of the following is typically NOT covered under a standard homeowners policy after a tornado?
A Nebraska producer sells a policy with a 3% wind/hail deductible but doesn't explain what this means in dollars. What risk does the producer face?