Have you read your insurance policy? You know that 160 page packet that comes in the mail or email every year. Well break out your readers! It’s time to check if things have changed on your policy.
The age of a roof has become a very important metric for insurance carriers. As a consumer the age and condition of your roof can determine if the insurance carrier will provide coverage to replace your roof. It can also limit your ability to get comparative quotes.
The terms and conditions of many policies have changed. A roof aged 15 years or older may no longer have replacement cost coverage. Once it hits a certain age the policy is automatically endorsed to include either a Payment Schedule or an Actual Cash Value (ACV) Roof Settlement. This means if the roof was damaged due to wind or hail the insurance carriers would assess the age of the roof and provide the ACV payment for the roof. This means that if the roof costs $10,000 to replace, an insurance carrier may assess that the age of the roof would create a 40% Depreciation and pay $6,000 for repairs. From there they would subtract your deductible. A $10,000 roof repair can now be reimbursed for $5,000. A homeowner with an older roof needs to look at their insurance policy for these type of changes.
Another change that may have been implemented on your homeowners policy is a Wind/Hail Deductible. This type of deductible would create a different out-of-pocket cost for a claim involving a windstorm, severe thunderstorm, or hailstorm. The wind/hail deductible can be wildly different than your normal all peril deductible. Some insurance companies have mandated a minimum Wind/Hail Deductible, like $2,500. Or some have implemented a percentage deductible. A percentage deductible would be a percentage (1/2% or 1% are popular) of the Dwelling Limit listed on your policy. A policy with a $500,000 Dwelling Limit with 1% wind/hail deductible would have a $5,000 deductible for that particular type of claim. A big change from the ever popular $1000 deductible.
Many are confused or even frustrated that insurance companies have begun to force these changes. Insurance companies aren’t trying to deny claims or make it harder for people to protect their homes. They are in the business of transferring risk. It has become too difficult to protect older roofs from the changing weather patterns. Older roofs become brittle and deteriorate. The shingles don’t handle the impact of a hail stone or the pressure high winds can place on them. The insurance company wants to be financially sound so when major catastrophic events occur, they will be able to take care of their customers in their time of need. This new set of weather patterns has placed extreme losses on their books several years in a row. To make sure they can protect the masses they have to affect the few.
A discussion with your agent is always a smart idea. Your insurance agent can talk through your particular situation and determine if there are other options you may have to protect your home. If you work with an Independent Insurance Agent, like my office at Mansfield Insurance Agency, they could look at all the different companies they represent. There may be a company that will handle a roof settlement in a more desired way.
Matt Hatoway
Matt is a second-generation agency owner at Hatoway Insurance Partners, Inc. Matt manages Mansfield Insurance Agency in Lawrenceburg. He continues to look for ways to help educate and advise his clients on the best ways to protect their families.
