Insurance policies are complicated and, while it’s not necessary to understand every detail of your policy, there are a few key aspects to understand, specifically when it comes to roofing. Since this post is geared toward roofing education, and most roofing losses are hail/wind related, we will look at understanding policies through the lens of a hail/wind insurance claim.
Deductible
Your deductible is the amount you pay before your insurance company pays for their share of an insured loss. It basically works like this:
Total loss amount = $10,000
Your deductible = ($2,000)
Total paid by insurance company = $8,000
So, although your insurance estimate is for $10,000 you won’t receive that amount from your insurance company. The $2,000 difference is your responsibility, or deductible. In Texas, deductibles differ depending on the type of loss (i.e.: fire, hurricane, hail/wind, flood), and most hail/wind deductibles are either 1-2% of the insured value of the home.
Example: A home is insured for $300,000 of coverage. A 1% deductible would be $3,000 and a 2% deductible would be $6,000. This deductible amount will be subtracted from the total amount of the insurance estimate (as explained above).
Replacement Cost Value (RCV) policy vs. Actual Cash Value (ACV) policy
This is the most important policy aspect to understand. The best place to start is by asking your agent what type of policy you have on your home. We have seen so many customers caught off guard by their policy type, and they end up with a fraction of the money they thought they were getting for repairs. In layman’s terms, an RCV policy is the best coverage (and most expensive). It ensures you will be paid fair market value to make all storm related repairs. The payments are issued in a two-check method. The first check subtracts the depreciated amount of your home from the estimate amount, but here’s the important part…that depreciated amount is RECOVERABLE once the repairs are made. This “recoverable depreciation” comes in the form of a second check that’s issued upon completion of the repairs.
An ACV policy, by comparison, does not give you that second check with recoverable depreciation. It is a cheaper policy (hence less coverage) usually used on rental properties. This means a homeowner will likely be left with a small percentage of their claim total, meaning they will pay more out of pocket for their repairs. An example:
Total loss amount = $10,000
Your deductible = ($2,000)
Non-recoverable depreciation = ($3,000)
Total paid by insurance company = $5,000
It’s extremely important to understand the policy type before a loss occurs. Ask your agent to explain your coverage, and ask for an RCV policy on your primary residence, especially if you live in Texas.
Policy exclusions
These are things notated on your policy that will not be covered if damaged. When it comes to roofing and hail/wind related claims, the “metal cosmetic exclusion” is the most common in Texas. Basically, this exclusion states that if a metal roofing component (like a vent) has storm damage (usually denting) but still functions appropriately, then the insurance policy will not cover it. The same is true for gutters and downspouts. Where it gets messy is with metal roofs. If a metal roof is dented from a hailstorm, but the insurance company still deems the roof to be functional, then it may not be covered. This makes for an ugly sight on a sunny day, as the roof looks like it was hit all over with a ball-peen hammer.
Remember, this post is geared toward roofing and hail/wind claims in Texas and is not meant to be an exhaustive list. The best advice we can give is to find an agent you trust and have them explain policy coverage as simply and completely as they can. Insurance policies are complicated, but if you get clarity on these three areas, you are less likely to be caught off guard after a hail/wind storm event.
If you are looking to have your roof inspected or are thinking of submitting a claim for roof repair or replacement, HUF Construction provides free estimates, and we will even work directly with you and your insurance company throughout the claim process. Call or message us today!