Recently we experienced a hail storm and my insurance companyof my insurance company briefing agreed to pay ten thousand dollars to replace it. A roofing contractor gave me an estimate eight thousand dollars. Does that mean I just saved $2,000? Actually the way insurance claims are paid today in the State of Texas is like this. The insurance company, not some roofer, is going to determine the amount of the damages on that loss.
And most of them use a process of doing physical inspection. Some carriers want to see 4 or 8 hits per 10 foot by 10 foot test square, on all four sides of the roof or two sides if it's a regular gable roof and once they establish damage some of them may want to see more. Ten to twelve hits, it really can depend on different factors how old the roof is Different carriers might have different criteria, but once they establish that there's damage they will create their own estimate. And many of you software called Exactimate
Some use their own variation of that it basically breaks down what the
current labor and material prices are for a particular market and it's upgraded monthly.
So, insurance companies are not arbitrarily assigning a dollar amount. They'll break it out. They'll itemize out how many squares One thing that confused a
lot of people when they look at an adjusters report is they'll see X amount of squares taken off and different value, a higher amount on the going back on. And that's because
there is a waste factor with roofing anytime you get to a valley or a hip you're going to cut some material and throw it away.
And so, just like a tile job you're going to need to buy more material than what you tore off to get it finished right. Once they establish this amount they will send you their adjuster's report. In a hypothetical situation say it's a $10,000 total loss on the roof. Well, in the old days if you had a $2,000 deductible, Let's say a $200,000 home with a 1% deductible would mean you have a $2,000 deductible…
And let's say it's a $10,000 roof Well in the old days they would give you $8,000 and say, "here you go… Have a nice day." And then what would you do? Go get a bunch of bids, shop, try to find someone you could trust…And then. If you could get it done for less than $10,000 then you save some money on your deductible. In fact, if you found somebody who could do it for $8,000 and you were confident that they were competent then hey you might have saved your entire deductible.
Several years back the State of texas basically the legislature came to an agreement with the insurance industry and started a process called "Recoverable Depreciation" on these replacement cost coverage
policies replacement cost coverage policies is what 99% of the people that live in their own home and have a mortgage on it have. It basically pays for the full replacement as opposed to an actual cash value
policy which you might see in a tennant
dwelling uh… Or or something with lesser coverage then they pay the actual cash value of it. What is was worth at the time of loss less the deductible so you get far less money.
But most of
home owners have a replacement cost coverage policy. And what they're going to do is look at the age of your roof and they're going to say well this roof was 10 years old and it was a 30 year life time roof so 33% of the age of
this roof has already been used up and so we're going to subtract three thousand three hundred dollars from your loss when we pay you that first check. So let's just round it to $3,000 and say they applied 30% depreciation on the loss. So, based on a $10,000 loss, subtract the $2,000 deductible the $3,000 depreciation and your first check will be $5,000.
Now a lot of people think that's all they're gonna get. They think that… They don't read their… They don't understand their policy or don't read it closely enough and they think $5,000 gee that's not enough to get my roof replaced and they'll sit on that check and a year will go by and after one year in most cases unless they filed for an
extension they can lose the right for them to recover that other three thousand
dollars recoverable appreciation by not taking action in getting the
And so we'd like to advise people that hey you kind of have a ticking time bomb from the date of the loss when you filed that claim in which time you need to go ahead and get that roof replaced and send the invoice in to the insurance company. When the insurance company receives an invoice for ten thousand dollars because the roof was done for the same
price as the adjusters report. They'll analyze it and say look we've already paid five thousand on this we had three thousand dollars recoverable depreciation our adjusters report said ten thousand that's what the invoice says and they'll release the final three thousand to the homeowner usually a week to ten days after they've received proof that the roof is on and that final invoice. But let's say he went shopping because that's what people do in a purchasing situation.
It's normal to go out and look for the best deal that's how we
are programmed to buy Since we were little kids we're looking for the best deal. So, you end up finding somebody who says, "hey, I'll do it for $9,000 and you think hey this is great. I'm going to save $1,000 on my claim. When the invoice goes into the insurance
company for $9,000 instead of $10,000.
The adjuster reviews and says, "HEY" they've got it down for nine thousand they picked the roofer, we didn't make them use those guys. So we're just going to send you $2,000. And when the home owner gets the $2,000. They go, "wait a minute…On your adjusters report it here that you're going to send me three thousand dollars when I get this roof replaced.
And the adjuster's going to say yeah but we only owe to make you whole to get
you back to full roof replacement. You got it replaced for $9,000 we've already given you five and you had a $2,000 deductible
so we're just going to give you two more thousand dollars. Sorry! But the down side is you probably got a guy who's cutting corners
somewhere. He either maybe didn't put on new felt paper He just really tore off the shingles off the old felt and left the old felt paper down and roofed down over that he might have reused the old valley metal he might be trying to recycle the old auto caulks, the pipe jacks instead of putting fresh one on it.
He may not be replacing all of the vents that got hit by hail that the insurance company paid for he might just be painting them and skating on it. And so you're not getting all bang for
your back i mean insurance companies aren't in the business of
going broke or grossly overpaying claims. So either he (the contractor) doesn't have insurance he's cutting corners on materials or he's cutting corners on his overhead to be able to come in under what the fair going rate is. That should be a red flag when people
come to you with pricing that's substantially less than what the insurance companies paying that's a sign.
Even though they might be telling you they're going to be first rate, top notch, they're gonna cut corners somewhere if they're on the up and up i mean if… Insurance companies, isn't like I'm saying grossly overpaying or trying to go out of business by overpaying losses. Interviewer: So as a homeowner in this situation I would've saved the insurance company a thousand dollars and gotten a thousand dollar cheaper roof. Yeah and taken the chance of somebody cutting corners putting staples instead of nails…
Yeah, cutting corners on that roof job. So it really isn't in your best interest. And so, this is a different purchase than most purchases in that in a roof claim situation what your goal really should be is not how can I save my deductible because that's not gonna happen if they
applied recoverable depreciation it's just not but what what the best thing to do is to get everything that you can for that ten thousand dollar loss and that's what we try to do at our company if somebody's got dented box vents what we do is suggest hey you've got these four dented box vents back there, they've given you "X" amount or dollars for that but you know you might get a lot bigger bang for your buck if you went back with ridge vent and we can apply the dollars that they gave for your box vents fill those holes with plywood. Felt over and then put ridge vent on and actually lower the temperature of
your attic make your AC not work as hard, lower
your monthly payment on electricity and your still just using the same insurance dollars thing and
smartest way and that's what were about helping the customer get the most bang for their insurance buck..