Homeowner’s Insurance and the Roof Claim

Much has been made of the claim of a “free roof” or “can’t hurt to make a claim, all they can say is no”

When you hear a roofing company representative repeat either or both of these statements, then you know you are in the midst of a scam.

First, and most obviously, nothing of value is free.  A roof is a very expensive project. It is the most expensive project that will need to be done on every structure.  Roofs will fail for one reason or another and must be repaired and or replaced.  For this very reason homeowner’s insurance claims for a roof’s replacement are as common as any claim made.

Every insurance policy has a deductible. A deductible is the amount that must be surpassed prior to any claim resulting in a payment to the homeowner.  If a homeowner has a $2000.00 deductible, then their actual damages must exceed $2000.00 before any payment will be made.  Thus, $2500.00 worth of damages results in a $500.00 payment.

Furthermore, your claim will be paid according to your coverage level.  Either actual cash value (ACV) or replacement cost value (RCV)

If your policy is ACV, then the insurance company will depreciate your roof by a formula based on how old the roof is. Therefore, if your roof has consumed  50% of it’s suggested life, then a portion of your claim will be depreciated by 50%. Then your deductible will be deducted from the resulting amount.  In this situation your final payment could be significantly less than the cost of the roof replacement.  Remember, if you make a claim you must make the repairs or the insurance company will cancel your policy.

An RCV policy will result in a claim based on the cost of replacing the damage while reducing the payout by the policy deductible. This is the most desirable situation.

A very undesirable situation would be one when an ACV policy has a high deductible on an old roof. Your payout will be low and you may have forced your own hand by making a claim resulting in a deficit and a mandate to replace your roof any the insurance company.  Insurance claims are now centrally recorded and the info is available to all other insurance companies. Making a claim and leaving your insurance company is no longer a way to “hide” the record.

The best advice I can give is: only make a claim when you have a legitimate claim, do expect to pay some money out of pocket, realize that once you make the claim you cannot change your mind and withdraw the claim.