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Leaky Roofs and Leaky Premiums

With over $19 billion in losses in 2021, Roof claims remain the number one driver of insurance losses.

News — 2 mins

Leaky Roofs and Leaky Premiums

The Zest

  • The roof is a critical component of a building’s structure and is the place where problems start, from water leaks to weather damage. In 2021, roof claims accounted for over $19 billion in losses, making roofs the leading cause of insurance losses.

  • Failing to accurately assess the roof at new business underwriting or renewal leaves carriers vulnerable. Damaged or poorly maintained roofs lead to heightened risk. Additionally, roofs continue to degrade after a policy is written, and changes in risk can be difficult to assess without ordering additional inspections.

  • Carriers struggle to determine appropriate premiums that align with the risk exposure, leading to premium leakage. When ZestyAI evaluated one million properties for a national carrier, we found that 1% of properties had major damage or missing shingles,  0.5% had more than 75% of their roof covered by trees, and 2% of policies were deemed high-risk.

  • ZestyAI’s Digital Roof is revolutionizing risk modeling by providing carriers with comprehensive and precise information on roof attributes. Digital Roof is a suite of roof attributes and characteristics that go beyond roof quality to include facets, angles, penetrations, and objects for a complete view of every roof in the US.

  • Carriers use Digital Roof to predict loss, price according to risk, refine the total insurable value (TIV) and the replacement cost value (RCV), set appropriate deductibles and identify roofs to apply actual cash value (ACV) endorsements, and monitor their portfolio for changes.

Quantifying Losses from Bad Roofs

The scale of roof claims is staggering. Losses exceeded $19 billion in 2021, representing 30% of all property loss dollars. Inaccurate reporting of roof condition and quality leaves P&C insurers at risk, but getting it right isn’t easy. 

Assessing the condition of roofs accurately is a complex task, as various factors including material, age, and exposure to severe weather all impact the likelihood of a roof claim. Failing to assess roofs properly during underwriting or renewal leaves insurance carriers vulnerable to losses when acquiring new policies and as policies age over time.

Older or poorly maintained roofs pose risks, such as leaks, structural issues, and expensive repairs. Additionally, roofs degrade over time, especially when exposed to severe weather, further increasing the chances and cost of a claim. Accumulated damage to roofs leads to significantly higher losses during weather events - for example, damaged roofs are nearly ten times more likely to suffer further harm.

Physical inspections at renewal have traditionally been the way to assess roof condition, but they can be both costly and time-consuming, so they can only cover a small percentage of a carriers book. Alternatively, questionnaires used to gather roof information often yield inaccurate data.

The challenges associated with roof damage are significant and have profound consequences for insurers, including higher claim frequency and severity, premium leakage, and underwriting challenges.

How Modern Carriers Assess Roof Condition

The statistics on roof claims highlight the urgent need for effective solutions. Fortunately, ZestyAI has an innovative solution to accurately and comprehensively assess roof risk and value for every structure in North America.

Digital Roof is a package of Z-PROPERTY, which delivers over 40 features covering parcel, structure, and roof insights for insurance and real estate companies. ZestyAI’s AI-generated 3D analysis goes beyond roof quality to assess facets, angles, penetrations, and objects for unparalleled insights on condition, complexity, and potential points of failure.

Case Study: Lowering Combined Ratio by 2.2%

Armed with this information, Carriers can accurately predict loss, price fairly, refine TIV/RCV, and monitor their portfolios for changes in risk. Recently, ZestyAI worked with a top 10 carrier to reduce combined ratio by a total of 2.2%

Premium Capture - 0.44%

By understanding the condition and complexity of the roof at the time of writing a policy, the carrier was able to price based on risk, and modify TIV to reduce premium leakage.

Loss Avoidance - 1.21%

With Digital Roof, the carrier was able to access exclusive insights on roof characteristics and identify common roof failure points like vents, skylights, and chimneys. They were also able to identify and avoid roofs with major damage.

Product Fit - 0.44%

By using ZestyAI the carrier was able to set appropriate deductibles and identify roofs to apply actual cash value (ACV) endorsements.

Inspection Optimization - 0.11%

The carrier was able to improve and streamline the inspection process using Digital Roof, optimizing inspection prioritization and reducing the need for time-consuming manual reviews and inspections.

ZestyAI worked with a top-10 carrier to reduce combined ratio by 2.2%


Roof damage presents significant challenges for insurers, leading to increased claim frequency and severity, premium leakage, and underwriting complexities. However, with Digital Roof, carriers can overcome these challenges and make more informed decisions while effectively mitigating risks. By leveraging ZestyAI’s Digital Roof model, insurers can improve risk selection, enhance customer experience, and optimize their portfolios for long-term success.


Want to take the guesswork out of assessing the risk and replacement value for every roof?

Learn more about Digital Roof

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