The insurance industry is obsessed with roof evaluations and using these evaluations to control their exposure to loss. A previous post [ Click Here ]
discussed the importance of roof inspections and the insurance carriers use of remote inspection tools. This trend has accelerated with increased use of artificial intelligence to review the images and render opinions.
An insured may find that their renewal includes new terms regarding changing the valuation of their roof coverage to Actual Cash Value versus Replacement Cost. If you are not familiar with these terms, please review [ Click Here ] and this article will define the terms for you. The insurer is limiting their exposure to a roof they judge to be showing its age.
Roof Warranties
Many roof owners assume their roof is warranted by the manufacturer and installer for the “life”. As with any warranty you need to carefully read the terms and conditions to understand the coverage provided. A client recently had a roof issue and a review of their roof warranty terms and conditions was educational.
Length of warranty
The roof was warranted for a period of fifty years. This applied only to owned dwellings. The same shingles on a condominium or apartment building only had a warranty of forty years. The same material, the same installer but a different customer and a significant reduction in coverage term. The full warranty period is limited to ten years. After ten years a prorated warranty is provided. This level of protection is 80% reduced by 2% for every year after until year 40. After 40 years the warranty is 20% of the value. This is straight line depreciation.
Wind Damage
The fifty-year warranty only extends wind damage coverage to fifteen years. The warranty also excludes wind damage above the 110 MPH limit defined in the warranty.
Hail Damage
Hail damage is considered an “Act of God” and is not covered by the warranty.
Property Insurance
Property insurance provides coverage for losses that have an identifiable date of occurrence. An event must be identified that caused the damage. The peril that caused the damage must be identified and your policy must be structured to respond to this peril.
Our article on different homeowners’ forms with some forms having a named peril versus an open peril coverage highlights these differences. [ Click Here ]
Roof Claim Adjustment
Damage claims to the roof will be adjusted based on the extent of damage. If the damage is limited to a portion of the roof, the insurance claim will address the value of that portion of the roof.
The insurance policy also has an exclusion for loss related to normal wear and tear. If your roof is reaching the end of it’s life, the wear and tear exclusion becomes an important consideration.
Valuation
If you have replacement cost, new for old coverage, you have the best potential for recovery. If you have Actual Cash Value coverage your loss will be adjusted for the depreciated value of the roof. This is similar to the pro-rated warranty provisions noted earlier in this article.
Matching Rules
Some states including Ohio and Kentucky have rules regarding “Matching” materials used in repairs. These laws require the insurance carrier to replace as much of the surface as needed to match the color, size, and texture of the surface. This provision is the lever used to request an entire roof replacement for a small area of damage. Some regulations limit to scope of matching to a “line of sight” area. This can lead to disputes as to the extent of the matching area.
Deductibles
One way insurance companies protect their interest is in applying a specific deductible for wind and hail damage to a policy. This can be a specific dollar amount or a percentage of the building value as the deductible. If these terms are present, be sure you understand the impact of this number. It can be a significant expense at time of loss.
What can I do?
The most important thing an insured can do is to inspect and maintain their roof. Knowing the condition, life expectancy and materials used will help you make the best decisions on roof repairs and replacement. Your insurance policy is intended for sudden and accidental events, it is not a maintenance or warranty program.
The Driehaus Difference
We understand policy structure, valuation clauses and deductibles. All of these variables factor into the design of your property insurance program. Knowing your roof age and condition is a key part of getting you the best possible insurance coverage. Knowing the appetites and underwriting processes of different insurance markets can help identify the best insurer for your situation.
Insurance is not an easy product to understand. Trying to condense the purchasing process into a short call or online form is not the best way to get protection. You need the experience and knowledge of the Driehaus Insurance Team. Call us at 513-977-6860 or contact us via the internet at www.driehausins.com. Register on our web site to download this article and the other articles mentioned. We want you to be an informed insurance buyer.