Roof Age’s Impact on Commercial Property Insurance

May 31, 2024

A commercial property’s roof plays a significant role in preserving the building’s structural integrity and protecting it from various weather exposures. As a roof ages, it becomes weaker and increasingly vulnerable to failure. Additionally, older roofs may be more prone to coverage exclusions in insurance policies and could contribute to denied claims when losses occur. To avoid such issues with insurance, commercial property owners must maintain their roofs and provide proper information to insurers. 


The Significance of Roof Age for Commercial Property: 


Based on average roof age data, most commercial property insurers either limit or fully exclude coverage for buildings with roofs over 20 years old. Older roofs are more likely to have issues such as cracks, sagging areas, and leaks, and they are more susceptible to large-scale damage or collapse. These exposures are key factors influencing premium rates or whether the commercial property will receive coverage. 


Impact on Commercial Property Insurance Coverages and Premiums: 


Providing incorrect data (intentionally or unintentionally) about a roof’s age will likely lead to inaccurate risk assessments during the underwriting process and skew premium calculations. This misalignment between commercial property owners and insurers can cause increased tension during the claims process. For example, when owners encounter property losses involving older roofs, insurers may discover incorrect roof age data and deny the associated claims. If inaccurate data was knowingly provided, this may amount to fraud and lead to being dropped by an insurer. Furthermore, insurers will adjust commercial property owners’ risk levels and premium calculations based on updated roof age data, potentially resulting in higher rates or additional coverage limitations. 


Even when providing accurate roof age data, commercial property owners should be aware of possible coverage complications with claims that involve older roofs. For instance, owners with policies offering actual cash value (ACV) coverage could face considerable out-of-pocket costs if losses require the replacement of older roofs. ACV coverage relies on the depreciated value of the affected property or structure when providing a payout. Additionally, older roofs may be non-compliant with the latest building codes; not all insurers provide coverage for building code upgrades, which may be required if the roof needs to be repaired or replaced. This coverage gap could further exacerbate out-of-pocket costs. 


Mitigating Risks and Securing Adequate Coverage for Commercial Property: 


Considering the impact of roof age on commercial property insurance, owners with older roofs should take action to reduce their risks. Here are some best practices for commercial property owners to keep in mind: 


  • Regular maintenance and repairs are crucial for older roofs, extending their lifespan and preserving structural integrity. Include periodic building code upgrades where possible. 
  • Accurate documentation is essential. Provide underwriters with maintenance schedules, repair records, and accurate roof age data to ensure precise calculations and alignment with insurers. 
  • Secure proper coverage by collaborating with insurance professionals. Review policies, determine specific coverage needs, and obtain adequate protection against potential financial losses. 


The Insurance Information Institute has reported that more than one-third (34%) of commercial property insurance claims arise from wind or hail damage, most of which involve roof-related losses. Commercial property owners must prioritize roof maintenance, accurate documentation, and proactive risk management strategies to mitigate potential risks associated with older roofs. Commercial property owners can secure adequate insurance coverage and protect their investments against unforeseen risks and liabilities by understanding the significance of roof age and taking proactive steps to address related concerns. Contact Shepherd Insurance today for more risk management guidance.