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A man inspects damage inside a Denver school the morning after the severe hail storm of May 8, 2017.

A man inspects damage inside a Denver school the morning after the severe hail storm of May 8, 2017.

Taking a hit: Colorado school districts grapple with insuring against hail

The 2017 hailstorm that hit the western suburbs of Denver, breaking records as the state’s most costly storm for insurers, is still wreaking havoc — now with school districts trying to secure insurance coverage.

Premiums are rising, deductibles are skyrocketing, and districts are having a harder time finding anyone willing to take on the risk of providing coverage.

One month into the new fiscal year, Aurora Public Schools is still looking for additional coverage for its bus fleet, and is also looking at alternative ways to protect its buses.

In Jeffco, which was ground zero for the hailstorm two years ago, district officials have had to compromise. Even with a patchwork of 14 policies, the district has managed to keep only $150 million in limits of its previous $200 million in property coverage.

And under the new policy and deductibles, a $12 million loss like the one that the Jeffco school district suffered in 2017 would likely not be covered at all.

Before the megastorm, the district had a set $10,000 deductible; now in the case of a wind or hail storm, it would have to pay for repairs worth up to 2 percent of the value of each building before any insurance would help out.

“This was the very best we could do,” said Joel Hirschboeck, director of risk management for the Jeffco school district. “And it’s costing us pretty much more than twice as much.”

It’s one example of the often-forgotten expenses school districts incur outside of the classroom.

“The core reason that we’re in the business of education is to provide education,” Hirschboeck said. “However to do that, and to do it responsibly, providing good facilities and good safe procedures, it’s like every other thing, each year it becomes a little more complicated and those things are not free.”

Some researchers believe large hailstorms — the main reason property insurance is becoming a “nightmare” for risk managers of school districts — are becoming more common in Colorado. Russ Schumacher, a professor at Colorado State University, and director of the Colorado Climate Center, said researchers prefer 30 years of data to definitively call something a trend, but said that signs in the last two years indicate that hailstorms in Colorado might be delivering larger stones than before.

In Jeffco, Hirschboeck, who has been with the district for more than 12 years, said the district has experienced a large claim from a hailstorm about every nine years, but the last one before the 2017 storm only caused about $3 million in damages.

Now, Hirschboeck said insurance carriers are considering Colorado a catastrophe-prone region.

“We never had been before,” Hirschboeck said.

District leaders in Jeffco and Aurora are looking at other ways to be prepared, including considering self-insuring and boosting reserves.

“We have had to have initial discussions about what would we do if we had another large hail claim,” Hirschboeck said. “We’re working on that.”

The answer, he said, is not just in getting more insurance. Better maintained roofs, for instance, might hold up better in a storm, he said.

“It’s more robust systems,” Hirschboeck said. “And to have a regular calendar for changing out our roof systems.”

School officials around the state have often lamented that regular maintenance of their school buildings has decreased as tight funding forces cutbacks. In Colorado, a state grant program helps school districts pay for building maintenance when their budgets can’t cover it. The program annually has more requests for funding than it can cover.

In Aurora, the district’s risk manager, Jeanette O’Dell, told the school board earlier this year that officials are beginning to look into the cost of building a roof over school bus lots.

Before now, the Aurora district had about $26 million in insurance coverage for the bus fleet. This year, the district has only been able to secure $2 million to cover physical damage to the buses. That might not go far if all the buses are damaged while sitting in a lot, O’Dell said.

And while property insurance has been the biggest problem for school districts, officials say other types of policies are also getting more expensive, such as liability insurance. The market recognizes that districts can now, for the first time in Colorado, face lawsuits following shootings and other incidents.

“Carriers are really pulling back at wanting to insure school districts,” O’Dell said.

It’s only going to get harder and harder every year, she said.