The paperwork you receive from your insurance company includes an estimate for roof repairs. If your check isn’t big enough to get your roof replaced, don’t worry because it is only an estimate – not a final insurance settlement.
Insurance companies cannot cancel your policy or raise your rates for weather related claims. However, when you’re involved in a catastrophe, your insurance company may raise rates on everyone impacted in order to stay in business or change some business practices… remember insurance companies are businesses and need to remain profitable.
A word of caution… If you hire a roofing company that charges less than the estimate from your insurance company, you run the risk of getting stuck with cheap materials, no warranty, an inexperienced roofing crew and a lack of service after the sale. All of which can cause considerable roofing nightmares.
And remember… the difference between your insurance companies estimate and the cheapest bid can’t be used to help pay your deductible. Your insurance company keeps all of the savings when you go with a bid lower than their estimate. That’s understandable because they’re in business to make money!!!
You pay a premium every year for your insurance, and you agreed to a deductible… by law it is your responsibility to pay that deductible.
The Insurance Claim Check(s) Process
With most policies, there are four key terms you’ll need to learn:
Actual Cash Value – Typically The Amount Of Your First Check From Your Carrier
Depreciation – Typically The Amount Of Your Second Check From Your Insurance
Replacement Cash Value – Your AVC Plus Depreciation
Deductible – The amount of your claim that you are responsible to pay
The first check from your insurance company is the actual cash value check or ACV check. It may be co-endorsed to your mortgage company.
Many contractors will ask for this check prior to doing any work or delivering material. In most cases YOU SHOULD NEVER PAY A DIME BEFORE YOUR ROOF IS COMPLETE!!!
Lesser qualified contractors need to have this check before the work begins… that’s typically because they are not financially stable.
The second check from your insurance company is your depreciation. The depreciation is simply the difference between the ACV and the Replacement Cost for your roof. This check will vary in size or percentage of your claim based on the age and or condition of your roof.
So on most insurance policies (called Replacement Cost Value Policies), your insurance company will likely hold back the amount of your settlement that is not paid unless and/or until you need it to finish fixing your home. The depreciation check is not sent to you until after you submit your roofing contractor’s final invoice to your insurance company… and the Depreciation is not paid unless and/or until you need it to finish fixing your home. You do not get to keep the difference from what your contractor charges you and the amount of the depreciation check. That’s why it doesn’t pay to go with the cheapest contractor… you don’t get to keep or use the difference.
We are construction insurance specialists… Meaning that we use the same software that many insurance providers use to cost out their claims. Most of the time we can do the work for insurance proceeds. Sometimes however to do this we work directly with your insurance adjuster to make sure that you get paid all of the insurance proceeds that you are due… so we can install a full protective roofing system. A system that you deserve from your coverage!!!
Beware… Other contractors may work 100% from your insurance paperwork without even going up on the roof. These people call themselves insurance specialists too!?! A quality contractor would never do this. Your roof must be fully evaluated, inside and out. Often times the insurance adjusters “scope” of work is off by a few squares (or units of roofing 1 square = 100 sq. ft) or may be missing some key components. We don’t claim to be adjusters but we are insurance specialists that work with you and your adjuster to make sure your insurance claim gets paid correctly!!!
Over the past few years, many insurance companies have been writing what is called an ACV policy. What’s worse is sometimes the insurance agent is not explaining how an ACV policy works, or even telling policy holders that their policy changed.
With replacement cash value policies the first check normally has your deductible and any applicable depreciation already deducted… with on these A.C.V. (actual cash value) policies, your depreciation is non-recoverable. That just means that once you get paid the first check, there won’t be any more money available to make the repairs. That means that to replace your roof, you will have to pay for the remainder of the cost yourself.
Beware… this is another place where you might get caught dealing with lower quality contractors, material and workmanship. In roofing, just like in all areas of life… you get what you pay for. Quality workmanship, materials, system components and warranties ALWAYS cost more that the cheap stuff.
It is important to know what type of policy you have… It will really determine the reroof / repair process. If you are not sure which type of policy you have, contact your insurance agent.
In a storm environment, with rising material and labor costs, it may also be necessary to request a supplemental, or a supplemental claim to cover the rising costs of labor and material. When a supplemental claim is paid, your insurance company will agree to issue a third check beyond the original claim to help your contractor cover the increased cost of the job. This check will be made out to the homeowner, but sometimes it will require the signature of your mortgage company too.