When you have a major loss to something that you own- it can be financially devastating. Luckily for most people, when that something they own is a house, 99% of the time, they have homeowners’ insurance that is meant to help them out when there is a sudden and accidental loss.
You purchase insurance to help bring you back to your pre-loss condition.
So when a big problem comes- like when you find out that you are likely going to need to replace your roof after a massive wind or hailstorm- the magic words that you want to hear are: “you’re next roof will be completely free.”
Yet, depending on how old your roof is, this might be something that you hear during the course of your roof claim.
Most of the time, whether or not you are on a full replacement schedule (100% paid for) or an actual cash value (ie. depreciated) schedule is completely based on the age of your roof.
Think of it like this- what is the average life span of a typical shingle?
20-30 years, right?
Assuming you have a 30-year shingle (we’ll just assume that everyone has the ones of the best side of the spectrum)- that would mean that if your roof is 20 years old, it has lived about two-thirds of it’s average life, right? Given average amount of average weather it would be about 66% of the way worn through.
Why is this logical?
Given the fact that most shingles (especially if they were put on 20 years ago) are rated for 20-30 years, if you have a 22-year-old roof, then you were probably looking at buying a new roof within the next few years.
Let’s face it- there are a lot of happy years on those shingles! A lot of sunrises and sunsets. A lot of rainbows and a lot of storms.
On the opposite side of the spectrum, you’ll have some people who end up with 40-year-old roofs because they are still waiting for that “epic” storm that comes and totals their roof so they will have an insurance claim that will buy them a new one. (I always say I can’t imagine any of my customers thinking this way, but you can probably imagine why insurance companies don’t love this).
Here is the thing When the insurance company pays out tens of thousands of dollars in claims on everyone when there is a hail-ageddon, it is bad for you.
It is bad for everyone.
To put it simply, everyone’s annual homeowners insurance bill goes into a pot of money and then when it pays all of those roof claims (and the other claims)- that pot empties out. When it gets low, insurance companies get nervous. What do they do? They have to raise rates.
When you think about it from a business practice, it is just not sustainable for a company to pay out $20,000 roof replacements (sometimes, customers have more than one over 5-10 years, because Mother Nature can be one cruel “B”) when someone’s annual payment is $1,100.
Even if the insurance company only has to pay this out once for a customer, you would have to stay a customer for over 18 years just for them to break-even, assuming you never have another claim.
I want to be clear.
99.9% of people have “full replacement” on their walls and the rest of their structure. In fact, with the company that I primarily sell home insurance with, a roof “depreciation schedule” is only a “thing” when the damage is caused by wind/hail.
This means that if your roof is destroyed by other types of losses, such as a fire, your roof is going to be covered for the full replacement cost, even if your roof is 25 years old.
Also- if your roof only needs a repair, the amount that the insurance company (at least the one that I work with) will pay is not depreciated- regardless of age. You only have to pay your deductible. This means that you goal should never be to wish that you need a total roof replacement just because your roof is older, and you want a free new one.
But some of my friends and neighbors are getting free roofs.
- They might have newer roofs.
- Or they might have an insurance company that guarantees a full replacement. Some companies do. They are loss leaders for them, and they make up for it in other ways- because the insurance pot of money still works in the same way. It is basic math. The price might be higher, or they might have more exclusions hidden in their policy in other places.
- They might be paying more than you for their insurance.
- There might be a lot of factors in play here. You simply cannot compare yourself against anyone else when it comes to insurance.
Some of those friends/neighbors that had older roofs that might have gotten a full replacement roof? Well… some of those companies that do that have a strict policy of dropping customers after only one loss.
Did you know that on most insurance applications there is a question that asks you if you have been non-renewed in the last 5 years?
And in that case- are they really getting a “free” roof?
So how do I pay for my share of the roof? I don’t have that kind of money.
You are given your payment based on the insurance company’s inspection; however when you are not getting a total replacement, it will be best to shop around for prices if you can- because you will basically be given a check to use any way that you can. If any of your neighbors are having their roof’s redone, sometimes you can get a deal because a company can save on transportation costs, etc.
You can also finance your portion the roof replacement with affordable monthly payment plans.
For those of you who are reading this for future knowledge, a good rule of thumb is to start setting aside some savings around your roofs 10–15-year mark so that if your roof needs to be replaced anytime after the 15 year mark, you are more prepared to pay your share of the cost. That way, once your roof hits 25-30 years, even if you haven’t had a claim, you can replace it yourself- which is just good maintenance.
And when you do replace your roof- whether it is through a claim or regular maintenance- be sure to remind your insurance company (send them proof with your paid invoice)- because they will change your roof’s age to 0 and it usually carries a wicked discount, which will also help offset that cost!
I don’t think I knew about this?!?! I don’t like it.
Most agents try their hardest to explain this at the time of sale- if your roof is on the depreciation schedule when you buy the policy.
However, in the most recent years, insurance companies have been tightening their belts and what may have been a 16 or 17-year full roof replacement schedule has (depending on when you purchased your policy) become an industry norm of the “15-year rule”.
Also, if your roof had a birthday where they were put onto the roof depreciation schedule, your agent likely didn’t even know about it (since keeping track of roof birthdays would be a little difficult)
Every year – about 70-days before you renew with whatever company you do business with, you are always sent a renewal package. This is sent however you opted into your documents (electronic or paper).
These are important documents! They tell you how your property will be covered and they highlight any changes to your policy every year. These documents tell you the exact percentage of your roof that would be covered in the event of a wind/hail claim.
This is a great time to go over any questions you have with your agent before payment is made (whether you pay it yourself or your escrow sends out a check)- because that document is a contract… it is the offer… and your payment is your acceptance of that offer.
You are saying that you agree to the terms of the contract and the insurance company is saying that this is the way they will cover you. The insurance company is transparent about its contract; however, it is up to the consumer to read the documents they provide.
I still think this is bogus.
No one likes having to pay large amounts of money for something unexpected.
I know that I sure don’t.
It is kind of like when you total your 2005 Nissan Altima the insurance company puts a $3,500 valuation on it before your $500 deductible. It probably will be hard to purchase a car for $3,000; but at the same time, that 2005 Nissan Altima has had 17 years of happy memories, 185K miles driven, and has been in several near misses!
I know it’s frustrating to think that you’re the “only person in the neighborhood that isn’t getting a free roof”.
Trust me- you aren’t.
Roofing companies advertise all over social media that they can get your new roof paid for by insurance. They aren’t adjusters and they aren’t licensed in insurance or insurance claims so I’m thinking…. Hmmmm… Similar to how the security alarm companies advertise that by installing their alarm system that you’ll get up to 25% discounts on your homeowner’s insurance prices (which by the way is also false).
It is in the roofing company’s best interest to have the insurance company pay for everything because then they don’t have to worry about getting money from the customer themselves.
People are happy when they are getting things for free. They will pay some of their extra money to upgrade when the initial amount is free. They are less likely to complain about the wait times for materials and scheduling.
People are frustrated when they have to kick in their own money. They complain more about material shortages and labor shortages and that causes the roofing companies to complain about the insurance companies. Round and round it goes…
Bottom Line
There are always going to be pros and cons to every different kind of contract, company you do business with, and quite frankly- situation you are dealt.
Going through a severe storm that causes your house to have serious damage is a traumatic experience! Having to deal with storm damage is stressful and scary.
There will always be a TON of information presented to you from a TON of different sources. The first rule of thumb is that when it comes to anything relating to insurance- unless someone is licensed in insurance, I would avoid anything they say. Second- keep in mind that there are literally hundreds of different factors that all come into play when any one person’s/family’s insurance contract is put together (including their rates).
Lastly- despite what all of the movies and tv shows say- the insurance company really isn’t the devil. Roofers and contractors (unless they are shady) aren’t the devil. For the most part, everyone is just trying their best to help everyone else out here.