Insurance companies study hail to help save costs - msnbc.com

Homeowner's insurance comes up big when tornadoes leave behind big damage.

It can be dramatic, but when insurance companies run the numbers, they pay a lot more over time for damage caused by a different phenomenon. As a whole, the industry pays out about $2 billion for hail damage each year. Holly Anderson of State Farm Insurance says 2011 was typical for Indiana.

"In Indiana, we saw about $83 million dollars worth of damage. That was about 21,000 claims," Anderson said.

Claim numbers - and the dollars paid out - were much higher after an April 14, 2006 hailstorm caused massive damage in Marion and Hamilton counties. After that storm, home repairs alone cost over $1.3 billion.

While the damage caused by other kinds of storms fluctuates from year to year, hail damage is a constant.

Hail storms are unpredictable, so researchers at State Farm Insurance Company in Bloomington, Illinois are constantly testing new and better building materials by simulating inevitable hail strikes. They do it with two-inch ice balls that weigh just over two ounces - a little bigger than a golf ball, smaller than a baseball, and not uncommon in places like Indiana. They shoot it from PVC pipe powered by an air compressor.

"Everybody ready?," says technician John Donovan, "3, 2, 1...go!"

With that, the ice ball comes out of the tube at terminal velocity - 77 miles per hour. It explodes on impact, but not before leaving a crater behind in the shingles big enough to collect water that will eventually work its way into a house. If a roof has this kind of damage, repair is not an option - t has to be done.

"What happens when you get this kind of damage on your roof?" said Donovan. "The bad thing is, you're not just going to have one hit like that, you're going to have dozens of hits, maybe hundreds of hits on your roof."

Insurance companies pay out so much to fix hail damage each year, it is worth it to them to do some long-term research on ways to prevent that damage. Before pelting these roofs with hail, researchers at State Farm put them out in the elements, sometimes for years. They have a "roof farm" made up of 48 small roofs that resemble what you would see on a dog house.

The roofs are built using standard-quality shingles and higher-quality materials made of cement, high-impact plastic, steel, and even Kevlar, the material that is in bullet-proof vests. They put the first group of test roofs out in the late 1990s. After the roofs spend time outside, they get taken inside and blasted with ice balls to see how age affects their viability.

The end game is to help develop better building materials, so insurance companies can save a little money in unpaid claims and policyholders, theoretically, can pay less in insurance premiums. 

So far, it's working - somewhat. 

All major building material manufacturers have at least some storm-resistant items in their line-ups. Right now, the safest products are still prohibitively expensive. Lower insurance premiums will likely follow, but right now, they are not low enough to offset the extra expense of building with the better products. In some states, insurance companies have to give you a discount for using strong materials to protect against things like hail damage.

For at least the time being, Indiana is not one of those states.