Common Myths About Roof Insurance Claims
Will filing a roof damage claim make my homeowner’s insurance premium go up? Can a contractor waive my deductible? Don’t I need to get 3 repair estimates? These are all common questions related to insurance claims in the roofing business. And they all have myths tied to them.
We’ll lay out some of the most common roof insurance myths and storm damage contractors. Then we’ll give you the truth about each…
Myth #1: Not filing a claim keeps my premium from going up
Many homeowner’s claims will be filed with your insurance company when a large storm hits your region. As a result, the insurance company might decide to raise rates across entire zip codes. Your premium could increase even if you don’t file a claim. And then you’ll be paying for everyone else’s repairs but your own.
Myth #2: My insurance company will drop me if I file a claim
To be clear, an insurance company can choose not to renew your policy for any reason, claim related or not. They tend to measure risk by geographic region. So, for example, if you live near a volcano that suddenly becomes active then your insurance company may choose not to renew all of the policies it holds in your area.
Now, when individual homeowners start to get “claim happy” the insurance company can begin to recognize them as high risk. However, in most cases one or even two claims in a three year period will not trigger your insurance company to drop your coverage. That is especially true if they are storm related and not the result of disrepair or lack of maintenance. Some state’s laws even prohibit coverage from being dropped due to damage claims caused by natural events, like storms.
So if you haven’t made a claim in the past few years, or even if you’ve made just one claim, then your risk of being dropped is fairly minimal.
Myth #3: I only have 1 year to file my storm damage insurance claim
Some insurance companies put a limit on how long you have to file your claim, in most cases 1 year. However, not all companies set a time limit. And occasionally the limitation will be lifted if the storm was large enough to affect a significant geographical area.
When a large storm event takes place, insurance companies use complex calculations to estimate their financial exposure. That is the total cost they expect pay for all of the resulting claims. Then they assign a budget to that event/region. Often, how they treat claims as the 1 year limit to file approaches will depend on how much of the budget remains.
Myth #4: I don’t have to pay a deductible for my roof restoration
This is a big roof insurance myth, but it’s not far from being true. You are legally responsible for paying your deductible for roof repairs or replacement. And, technically and legally, a roofing contractor cannot waive your deductible. The insurance company is going to take your deductible amount out of the first check they send you.
If your roofer simply gives you a discount in the amount of your deductible then that discount will be reflected in your final invoice. The final invoice must be sent to the insurance company in order for your final payment to be released (see myth #6 for more details). Insurance will then pay the final payment based on the new lower amount, thereby taking the discount for themselves. If your contractor gives a discount and omits it from the final invoice that would be committing insurance fraud.
But many roofing contractors have developed workarounds. They can offer you “referral bonuses” for other customers that you may or may not have sent them. Or they can pay you “marketing fees” for allowing them to post a sign in your yard. Or perhaps they will provide you with products or services equal in value to the deductible. For example, giving you upgraded materials or an extended warranty.
Myth #5: A roofing insurance claim means a new roof
Your home insurance policy likely covers your roof based on the condition it was in when you bought the policy. And policies typically cover roof repair or replacement using “like kind and quality” materials. So, if similar materials are available and your roof can be returned to its original condition by being repaired, the insurance company will not pay for full replacement.
Where that gets a little murky is in determining what can be repaired vs. what justifies a full replacement. The majority of insurance carriers will use the 50% threshold. If more than 50% of your roof is damaged then you’ll be approved for full replacement.
Myth #6: Insurance gives me a check and I spend it how I want
You might say this roof insurance myth is both true and false at the same time. Here’s why…
Most homeowner’s coverage extends to full roof replacement cost. But, the insurance company is not going to pay full replacement unless you actually restore the property to its original condition. In other words, you have to prove that the repair work was done in order to receive full reimbursement.
When you file a valid claim, at first the insurance company will only reimburse a portion of the replacement cost. The amount they pay initially is called the “actual cash value”, known in the industry as your ACV. The reason is, just like your car, the property covered by your homeowners insurance depreciates.
Of course, if you are okay with your property remaining in its damaged condition then you can spend the ACV check as you like (technically, the myth is true). But you will only receive the ACV, not the full replacement amount. And the insurance company will never cover any damage to that facet of your home ever again. Furthermore, any future damage resulting from the lack of repair will also not be covered.
To be fully paid you must prove the home restoration work was done. That means working with a contractor who will produce and submit all of the required paperwork to the insurance company. Only then will the difference between the depreciated value and full replacement cost be paid by your insurance company.
Myth #7: You should go with the lowest bid
Many homeowners think they need to provide 3 repair estimates to their insurance company. But this is a roof insurance myth. Similar to the way a contractor discounting the amount of your deductible turns into savings for your insurance company and not for you, choosing the lowest bidder is helping the insurance company and not helping you.
Insurance companies use an estimating software called Xactimate. It has set prices for materials and labor based on the going rates in your area. Insurance will pay the Xactimate price and no more. But they’d be happy to pay less if you can find a contractor who will do it for less. That usually means cutting corners, using lower quality materials, or forgoing the programs that would offset your deductible. All of those results are bad for you.
As the homeowner, you should choose the contractor that you trust the most to do the job right. You are not going to “make money” from the insurance claim. So you might as well get the best materials and the best workmanship you can find for the price the insurance company will pay.
Myth #8: Insurance coverage will match any roof repair or replacement estimate
The overwhelming majority of homeowners insurance claims result in the insurance company sending their adjuster to assess the damage. The adjuster will decide what they believe to be the extent of the damage and then use Exactimate to estimate the restoration costs.
Your insurance company will not pay more than their original estimated amount, unless you and your contractor can reasonably justify the additional costs. This is done through a process called supplementing the claim.
If the additional costs are not necessary to return your property to its original condition, then you will be responsible for the extra amount. For example, if you upgrade the materials used then you would pay the difference.
Myth #9 – The total amount of your claim is approved after the restoration is complete
After the insurance adjuster has inspected your property they will provide you with a claim summary. In that summary you will find their estimate for the cost of repairs. That is the amount you will have to pay a contractor for everything the insurance company has agreed to cover, less your deductible of course.
A good contractor will review that insurance summary and immediately know if the adjuster overlooked or omitted any required expenses. An example would be, in the event of a large storm your insurance company may bring in out-of-state adjusters to handle the influx of claims in your area. An out-of-state adjuster may not be familiar with local building codes causing them to miss required labor or material items.
In this case, your knowledgeable contractor will address the oversight with your insurance company before beginning restoration. They do this by submitting a supplement to the claim. In doing so, your contractor has streamlined the process for you and helped to ensure you receive full benefit from your policy.
There are some supplement worthy expenses that cannot be foreseen. Consequently, it is true that the full claim amount will not be known for every single claim prior to restoration work being completed. But you could say 90% of the time a homeowner and their contractor will know the total contract amount before work begins.
Myth #10: Home insurance covers damage caused by age or lack of maintenance
Home insurance does not cover damages caused by poor maintenance, including mold. If your home falls into disrepair and a reasonable person would recognize the need for maintenance, then any resulting damage might not be covered by insurance.
Here’s an example:
Your home is struck by a hail storm and insurance approves your claim for roof replacement. You collect the ACV check from the insurance company. Instead of replacing the roof you decide to buy yourself a fancy vacation.
Six months later you have a roof leak and water runs down the ceiling and walls in your kitchen, bathroom, and master bedroom. Now you will have to pay out of pocket for the new roof and all of the interior repairs. All because you knew the roof was damaged and decided not to fix it.
In Summary
Many roof insurance myths are perpetually circulating. Most of them have some basis in truth. Nearly all of them involve ways that an experienced contractor can work you to make the most out of your storm damage claim.
If you have questions about any of the topics above, or any other questions about storm damage claims, contact the experts at Legacy Exteriors TN. We’ve been helping homeowners in the Nashville area for years. And we know how to pull all of the levers for our customers to maximize your return on a claim.