Insurance and your roof: What to know when buying a policy or filing a claim

Your roof is the first line of defense against severe weather. In Texas, a roof can take a beating from the weather, so here’s what you need to know when you buy a home insurance policy, file a claim, or replace your roof.

Buying a policy

Replacement cost or actual cash value

Some policies pay up to the full cost to repair your roof at current prices. This is called replacement cost coverage. Some policies pay less if the roof is older or showing wear. This is called actual cash value coverage.

When you renew your policy, check to see if there are changes to your roof coverage. As roofs age, some companies will switch to actual cash value. And if your roof is in poor condition, your company might not cover your roof at all. Your company should tell you when they change your coverage.

 How does it affect a claim payment?

Let’s look at how your insurance company will pay for roof damage depending on the type of coverage you have. The house in these examples is insured for $200,000 with a 2% ($4,000) deductible. The entire roof was damaged by a storm that insurance covers. The value of your house and amount of your deductible may be different.

Replacement cost coverage

If it costs $10,000 to replace the roof, a replacement cost policy will pay the same amount no matter how old the roof is:

Cost to replace roof      $10,000

Minus deductible          – $4,000

Policy would pay          $6,000

Actual cash value coverage
If it costs $10,000 to replace the roof, the amount an actual cash value policy will pay depends on how old the roof is:
 5-year-old roof10-year-old roof20-year-old roof
Actual cash value of roof$8,500$7,000$4,000
Minus deductible– $4,000– $4,000– $4,000
Policy would pay$4,500$3,000$0

Deductible amounts

A deductible is an amount you must pay before your company pays. Ask your agent if the deductible for wind and hail damage is different than the deductible for other types of damages. If it is, you might pay more out-of-pocket if your roof is damaged in a storm.

Here are some things to know about deductibles when deciding what policy to buy.

1. Know the math

A deductible may be a specific dollar amount or a percentage. If a policy has a deductible that’s a percentage, make sure you know how that translates to a dollar amount. Here are two examples for homes insured for $150,000:

      • Policy A has a $500 deductible. A hail storm destroys the home’s roof, and the cost for repairs is $6,500. Policy A will pay $6,000 of the cost to repair the roof.
      • Policy B has a 5 percent deductible – or $7,500. If the home needed $6,500 in roof repairs, Policy B would not pay anything because the amount of repairs is less than the deductible.

2. Know when it applies

Deductibles for home and auto policies work differently than deductibles for health policies.

For health policies, the deductible usually covers a year.

For home and auto policies, the deductible will be applied to each claim. If you have a wreck in February and your car gets broken into in June, your insurance company will subtract the same deductible amount from the damages of each claim before paying.

3. Know what works for you

In general, the higher the deductible, the lower the cost for the policy. When deciding what deductible is right for you, think about how much you can afford to pay if your property is damaged. Remember that filing small claims may affect how much you have to pay for insurance later. Switching from a $500 deductible to a $1,000 deductible can save as much as 20 percent on the cost of your insurance premium payments.

4. Filing a claim

You can file a claim if a storm, tree, or something else damaged your roof. If you have replacement cost coverage, the company will pay with two checks. The first check will be a partial payment. Your company will send the rest of your claim amount after you’ve started repairs.

Remember, your insurance company won’t pay for a new roof just because it’s old or worn out.

Houston Roofing Experts

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