Understanding your insurance claim and the entire process involved
Colorado has as many hailstorms as any state in the country, even so many homeowners have never had to file an insurance claim.
When they finally do and they receive their package back from the insurance
company it’s easy to why so many people we speak with are confused. There’s a
big packet of paper with a bunch of numbers and terms which are foreign to most
folks. Even when meeting with the
adjuster it gets confusing…depreciation? Actual cash value? Recoverable cash
value? Supplements? It’s easy to see why it’s beneficial to have someone
familiar with the process walk you through it. The roofing salesman can be a real asset. Make him work for you. Often times we roofers catch a bad rap. It’s
understandable. There’s a lot of money to be made in the roofing/contracting
business. The truth is, it’s just like any other service industry: seeing the
mechanic, having the yard landscaped, even seeing the doctor or the dentist. At
some point we all have to let go and trust a professional. It’s no different
with roofing. Find a contractor you feel good about and let him guide you
through the process. A good contractor will make sure you get a fair claim and
you get the most for your dollar.
Inspection and Evaluation
We’ve heard it all too often: “I can get you a new roof!” or
“We'll get it bought”. Well that’s great and all, but the real question is do
you actually need a new roof? Unfortunately
the process starts with the home having damage. This is generally caused by
storms with the actual damage being caused by wind and hail. Often times the
damage can initially be subtle, even sometimes barely noticeable. But in time
as the wind blows and rain falls the damage will become more prominent as the
grains of the shingle begin to wash off the roof.
If the storm just
came through or if you just never had your roof inspected the process begins with
an evaluation. We have years of experience and many of us are licensed adjusters.
When evaluating your property we first take a walk around the home and look for
hail damage to the house; the siding, gutters and windows. When assessing the
roof we look for hail blemishes and wind damage. Sometimes the damage can be
seen from the street and other times you really need to get up there and poke
around. I’ll often meet with a homeowner and they’ll say “Well we already had
the adjuster out and he said there was no damage”. I ask if I can have a look,
snap some pictures and we’re calling for a reinspection. This is why it’s
important to have someone qualified present on your behalf during the initial
adjustment. Some insurance adjusters are great while others can be over the top
stringent. When meeting with an adjuster on your behalf we make sure absolutely
nothing is missed. We take our own measurements and take note of the type of
materials which currently exist on the home. We type up an estimate using the
same software as the insurance company and we make sure we’re on the same page
before any work begins. If the adjuster did miss something we’ll know when we
compare our estimation with the insurance company’s. If that happens to be the
case, we contact the insurance company and fax them in a copy of our estimate
for approval. Truth is most reps work on commission. I know I do and I would much rather let a homeowner know their roof is in good shape and give them a certificate of inspection than take the time to try and have a roof replaced when I know its in good shape and most likely will get denied.
If the storm was big and lots of claims are coming in the
insurance companies will often pull different kinds of adjusters into the mix.
I’ve actually met with “mold claim” adjusters. Sometimes these guys won’t even
climb a roof. They’ll measure it from the ground and they often miss damage. I
will say for the most part insurance companies and their representative
adjusters do a good job. They can be a great source for knowledge and we’re
grateful for them. That said there are a few insurance companies out there I
wouldn’t insure my dog house with.
Actual Cash Value,
Replacement Cost Value, Depreciation and The
Deductible
These are the terms that you will be confronted with when
you receive your insurance claim.
You’ll receive your paperwork outlining the work that needs
to be done and and up-front check for the actual cash value. Actual Cash Value
is what the damaged property is actually worth currently with all its age and
damage. The Actual Cash Value check is for that amount less the
deductible. This is the initial check a policy holder receives when their roof is being replaced. Now, most policies are called
RCV Policies. What that means is that provided you actually do the work, you will
be cut a second check to cover the cost of replacement – Replacement Cost Value
- RCV. The other type of policy is called an ACV policy. This policy will only cover the actual cash value of your roof. This means the policy will only pay out what the roof is actually worth at the time it was damaged less the deductible. The homeowner receives one check and is responsible to cover the rest out of pocket. These policies obviously have a smaller premium.
Now when the
deductible comes into play things can get tricky. Nothing is more feared or
misunderstood as the deductible. I’ll
sit with a homeowner who has a claim for $15,000 and a check for $9,000.
They’ll tell me they want a bid because they aren’t interested in paying their
$2000 deductible. The thought process goes; get a number of contractors out to
the property and get them all to bid for the job. If they come up with a total estimate of $13,000 or under, problem solved! See this is where people make a
common and costly mistake. This is also where depreciation comes into play. The
insurance company is still holding on to $5,000. This is your depreciation
check. The adjuster will tell you upon completion of the project have your
contractor send us an invoice and we’ll release your depreciation. So the
homeowner chooses a bid that is $12,500 thinking that covers my deductible and puts another $500 in my pocket! They
get the work done. They may have had to settle for a roof that wasn't as nice as the one being replaced but they made a cool $500 and took care of that costly deductible. No one likes deductibles.
Can’t I make a few
bucks on my insurance claim?
Unfortunately for the homeowner, that’s not what
happens. They received that first check
for $9000 and it is not so clearly stated in the paperwork that the payment
represents $11,000 since they are responsible for the other $2,000. To the
average person, insurance paperwork is confusing. The insurance company is
smart. They took the deductible right off the top of that first check. Then the
insurance company receives an invoice from the contractor for $12,500. A check
is cut for $1,500 and mailed to the homeowner. Now it’s time to pay the contractor
and this is where things get real sticky and uncomfortable. You already gave
him the first check for $9,000. He billed for $12,500 leaving a balance of
$3,500. Now you just received a check for $1,500. The contractor stops by and
sits down with the insured and is usually told “We didn’t receive enough money”. Well, actually you did and he wants his
$3500. The plan backfired. Not only did this plan not put $500 in your pocket,
that deductible you thought you were avoiding was already subtracted from your
first check. You now have $2500 less than you were expecting and a contractor
sitting at your kitchen table waiting for his money. This can get uncomfortable for all parties
involved.
So when you have a contractor/roofer tell you he needs to be
able to negotiate with your insurance company in order to come up with his
price, you should trust him. Sure, he’s going to bill the insurance company for
the full amount, but he’s going to put it back into your roof. Getting a bunch
of roofing companies together to bid against each other does one thing, saves the
insurance company money. They have to
pay fair market value on your damaged property. When they receive a bid for
less, they pay less. The days of insurers cutting checks for the full amount of
the project are behind us. Depreciation ensures you only see that money if that
money is billed for. Don’t make this mistake. Understand that money is there
for the contractor. Sure, work the best deal you can, ask for an upgraded warranty but understand with depreciation
and mortgage companies often being listed on the checks, it’s extremely
difficult to make money on your insurance claim.
If I put a claim in my rates are
going to go up
This is another common misconception. Sure your rates are
going to go up but they’d go up regardless. When it comes to weather related
events, in the industry they’re known as “acts of God”, you’re off the hook.
It’s not like you lit the kitchen on fire. Fortunately we don’t control the
weather. Homeowner’s insurance rates are based on zip-codes and the climate/weather
in that area, among other factors. If you live in an area that receives storm
damage, it doesn’t matter if you replace your roof or not, you’ll experience a
hike in premium. Just think of the people who live on the coast in Florida or
in the northern plains where it floods every year. You don’t have to be able to
take a swim in your basement to experience high insurance premiums. Here in Colorado we're living in
tornado country and if you’ve never replaced your roof you better believe you’ve
paid for some of your neighbors to do so.
