Step 1 – Educate Yourself
The average American homeowner is tasked with replacing a roof on their home less than once in a lifetime. Most homeowners have never initiated a claim with their homeowners insurance either. Educating yourself on what to expect and the pitfalls to avoid will make for a much more positive experience overall.
A good restoration contractor will perform the job as promised, a great restoration contractor will ensure the entire process serves you the absolute most advantageous ways possible. Not all materials are equal in their quality and not all contractors have the same expertise, experience and qualifications to complete your project properly. Once repairs are completed it is too late to change your mind. It is worth the time do a little homework and compare product warranties for yourself.
These are some key insurance related terms you want to know:
Insurance Claim: Contacting your insurance company and notifying them that you are concerned you have damage can constitute filing an insurance claim. Your insurance company is not involved or capable of simply checking to see if you should file a claim. Many homeowners do not realize that simply calling their insurance company and notifying them they think they may have damage results in the start of the claim process.
Adjuster: A filed claim will result in an insurance adjuster being tasked with reviewing your property for damage and determining if your policy covers any such damage. An adjuster can be an employee of an insurance company or an independent contractor hired to work on behalf of an insurer. An adjuster should be an impartial observer that bases his or her findings on evidence collected. It is best practice for the homeowner to be available at the time of the adjuster’s inspection of the property.
Adjuster’s Report: The report will contain an itemized list of the components of your home to be replaced or repaired. This document is also known as the Scope of Project. The report will typically contain a cover letter, the various breakdowns of each component of the project and sketches. The dollar amounts for ACV (actual cash value), RCV (replacement cost value), Depreciation, and Deductible are detailed in the report.
ACV (Actual Cash Value): With insurance loss settlements the Actual Cash Value is usually used to compensate the policyholder for their covered losses. This amount is what the adjuster determines to be the value of the property based on its age and condition before the storm damage. The Actual Cash Value is the amount that the insurance company will issue a check for after deducting any applicable deductible. Some homeowners insurance policies only cover Actual Cash Value. Although less common, there are a growing number of insurance companies offering ACV only coverage so that they present lower premiums to shoppers.
RCV (Replacement Cost Value): The cost in today’s dollars to replace an item with a new item of like kind and quality, similar to the item that is being replaced. Insurance policies that include ACV coverage will typically pay the difference between the Actual Cash Value and the Replacement Cost Value once the claim related items repairs or replacement is completed. Replacement Cost Value is the maximum amount that will be paid under the claim once proof of completion is provided to the insurer.
Deductible: Property insurance typically has an amount that the policyholder is responsible for before the insurance pays any amount towards a claim. The amount on each policy varies, but is typically a flat dollar amount or a percentage of your total dwelling coverage amount (example 1% or 2%).
Beware of anyone offering to “pay your deductible”, “waive your deductible”, or offering “cash back”. For over 30 years Texas law has required a property claim recipient to pay their deductible in conjunction with a repair project. This has been widely ignored by most contractors.
Effective 9/1/19 a new Texas law took effect that clarifies the old law making it a criminal offense for a contractor to pay, waive, absorb, or otherwise decline to charge or collect the amount of the insured’s deductible. Contractors cannot provide a rebate or credit in connection with the sale of goods or services that offsets all or part of the amount paid by the insured as a deductible or in any other manner assists the insured in avoiding monetary payment of the required insurance deductible. As part of the 9/1/19 law change insurance companies can now require proof of deductible payment before paying out the depreciation, or holdback, dollar amount of your claim once the repair work is completed.
Depreciation: The age and wear of an item creates a depreciation effect. Particularly with consideration to your homes roof, there is an average lifespan that can be expected. An adjuster must make a determination as to what percentage of the useful life has been consumed since it was new. The depreciation amount added to the Actual Cash Value amount should equal the Replacement Cost Value. Alternatively the Replacement Cost Value less the depreciation calculated is equal to the Actual Cash Value, or what the remaining lifespan is being stated to be valued at..
Indemnity: The sum you are paid for a loss. With insurance policies, the idea is that you are returned to your pre-loss situation or property status. Using a 15 year old roof as an example, you can’t replace your damaged 15 year old roof with an undamaged 15 year old roof. That’s why it’s important to understand whether your insurance policy covers Replacement Cost Value or just Actual Cash Value. If you have Actual Cash Value coverage you will be left with the remaining cost to replace or repair an item to like new condition.
Supplement: If additional damage or necessary items to complete restoration work are uncovered, which were not listed on the original adjuster’s report, it is possible to submit a supplement to your insurer’s claims department requesting reimbursement for the those items. Supplements are quite common due to the fact that it’s virtually impossible to see what is under visible materials such as your roofs shingles or your walls siding until the old materials are removed. A great contractor will become familiar with all aspects of your claim and your property to ensure no details is overlooked during your restoration.