Home Insurance

[Brian Runau]

over the past 30+ years we haven't filed many claims with our insurance carriers. I can only think of one in 2005 for the home we are in now. Hail storm. At the time we were with Liberty Mutual. They replaced the roof and gutters as a result, we had only been in the home for a year. We downsized for retirement.

A few years ago, our current carrier, Erie, advised me after a hail storm went through that if there was damage they would potentially replace the damaged area. I thought it was wierd, but no real damage so I let it go. Just remembering this now for some reason, hope it's not a premonition.

I've reached out to another carrier to get a competitive quote and they are asking for age of mechanical's, roof, what kind of wiring, plumbing etc... A little confused by this since we always carry guaranteed replacement cost on our home and replacement cost coverage. With this type of coverage, the age of roof etc... shouldn't matter? They shouldn't depreciate something that is damaged and only cover a portion of it?

Appreciate insight from others with more experience with this.

Thanks.

Brian

[Dwayne Watt]

Carriers are looking for to reasons not to pay. Many are depreciating roofs and increasing the deductible to a percentage of the home's replacement value. If they believe the roof has a 25 year life and it is 12 years old, they pay for only half the cost of the roof replacement less the deductible. This can mean they pay little or nothing toward replacement. The reasoning is you would have to replace the roof eventually yourself, so the half the loss is the homeowner's problem. Same thing with wiring and plumbing, if old there will be reluctance to pay a claim if any chance it was related to the loss. The catch here is virtually all houses have wiring and plumbing that do not meet current codes so therein lies the "gotcha". In any case, the age and location of the home and its mechanicals are used to set the insurance premium price.

[Jim Becker]

Age of roof, etc., certainly goes into underwriting to determine premium for a homeowner's policy. Why? Older roofs increase risk for damage that would be covered under the policy. The fact that you will contract for full replacement cost (which should be what ANYONE gets anyway) doesn't matter relative to the data they collect to determine the premium to offer coverage at. Those data points will affect policies that don't have full replacement cost, too, for those unfortunate enough to have them.

[John Ziebron]

I'll cover my experience in a minute but after it was all said and done my research indicated that damage to a roof does not necessarily mean complete replacement. And in a neighborhood that experienced damaging hail newer roofs may not show much, if any, signs of damage at all because the asphalt is still pliable and will absorb the hail blow with no denting. An adjuster or certified roofing contractor will make this assessment. In cases where there is only partial roof damage like from a falling tree or limb most insurance companies will only reshingle the impacted area after structural repairs.

In 2020 a large hailstorm came through my area. My home and 2 of my neighbor's homes were all built in 2006. The assessment was damage requiring complete replacement. I didn't go on my roof so all I can say is that the damage (dents) were not visible to me from the ground. All 3 of us, with different insurance companies, carried full replacement insurance and only had to pay our deductibles. To my surprise all 3 companies paid for complete tearoffs. And here's the interesting part I discovered, at least with my insurance company. I found that if you get a new roof on your home you can contact your insurance company and they will adjust your premium in the next term. So I did that. I'm guessing that that section of the insurance company didn't know, or maybe it didn't matter, that their company just paid for the bulk of my new roof but my next premium was lower. That's what I call a win win.

[Brian Runau]

Age of roof, etc., certainly goes into underwriting to determine premium for a homeowner's policy. Why? Older roofs increase risk for damage that would be covered under the policy. The fact that you will contract for full replacement cost (which should be what ANYONE gets anyway) doesn't matter relative to the data they collect to determine the premium to offer coverage at. Those data points will affect policies that don't have full replacement cost, too, for those unfortunate enough to have them.

Jim: I'm OK with that initially on my premium, but not having a lot of experience with claims, and too much time on my hands now, My brain is struggling to understand replacement cost, vs what I read they do, depreciate and then determine what to pay out even though the coverage is replacement cost? Thanks Brian

[Jim Koepke]

The assessment was damage requiring complete replacement. I didn't go on my roof so all I can say is that the damage (dents) were not visible to me from the ground. All 3 of us, with different insurance companies, carried full replacement insurance and only had to pay our deductibles. To my surprise all 3 companies paid for complete tearoffs.

The shingle may have not looked bad to the average eye, but the hail hits may have caused tiny cracks in the shingles. This could allow water infiltration into the roof structure. In the long run it may have cost the insurance company a lot more if the didn't replace the roof.

jtk

[Brian Runau]

I'll cover my experience in a minute but after it was all said and done my research indicated that damage to a roof does not necessarily mean complete replacement. And in a neighborhood that experienced damaging hail newer roofs may not show much, if any, signs of damage at all because the asphalt is still pliable and will absorb the hail blow with no denting. An adjuster or certified roofing contractor will make this assessment. In cases where there is only partial roof damage like from a falling tree or limb most insurance companies will only reshingle the impacted area after structural repairs.

In 2020 a large hailstorm came through my area. My home and 2 of my neighbor's homes were all built in 2006. The assessment was damage requiring complete replacement. I didn't go on my roof so all I can say is that the damage (dents) were not visible to me from the ground. All 3 of us, with different insurance companies, carried full replacement insurance and only had to pay our deductibles. To my surprise all 3 companies paid for complete tearoffs. And here's the interesting part I discovered, at least with my insurance company. I found that if you get a new roof on your home you can contact your insurance company and they will adjust your premium in the next term. So I did that. I'm guessing that that section of the insurance company didn't know, or maybe it didn't matter, that their company just paid for the bulk of my new roof but my next premium was lower. That's what I call a win win.

interesting. I get partial replacement due to limbs and structural damage etc... Guess I just have a misunderstand that hail damage replaces the entire roof, based on my one experience VS what I heard a few years back. Thanks. Brian

[John Ziebron]

The shingle may have not looked bad to the average eye, but the hail hits may have caused tiny cracks in the shingles. This could allow water infiltration into the roof structure. In the long run it may have cost the insurance company a lot more if the didn't replace the roof.

jtk

Thanks Jim. I should have expounded on that a little more. I was merely trying to pass along that just because there doesn't appear to be any damage from hail you should always get a licensed contractor to exam it, which I'm sure they will do fro free.

[Brian Tymchak]

interesting. I get partial replacement due to limbs and structural damage etc... Guess I just have a misunderstand that hail damage replaces the entire roof, based on my one experience VS what I heard a few years back. Thanks. Brian

One variable that comes into the equation that determines repair vs full replace is whether the existing shingles are still available. If not the insurance company is, I believe, obligated to replace. My next door neighbor just had a full replace due to existing shingles not available. It would have been a repair if they had been.

[Doug Garson]

Insurance companies are for profit companies and thus must adjust their business model as the risk increases. Here's a quote from the Insurance Institute of Canada "Changes in exposure mean that large losses will become larger, and the average annual severe weather claims paid by insurers in Canada is expected to double over the next 10 years, increasing from $2.1 billion a year to $5 billion." I suspect the US market may be even worse due to higher severe weather risk due to hurricanes and tornados. If a ten year old roof is more likely to suffer damage from a storm then the risk is higher for them and thus they will want to increase the premiums accordingly. Not being greedy just being smart businesses.

[Jim Becker]

Jim: I'm OK with that initially on my premium, but not having a lot of experience with claims, and too much time on my hands now, My brain is struggling to understand replacement cost, vs what I read they do, depreciate and then determine what to pay out even though the coverage is replacement cost? Thanks Brian

If you have full replacement cost, that's how your claim is paid out. There's no "depreciation"; quite the opposite. They pay out what it costs to replace like for like in current conditions. Most replacement cost policies also have an automatic adjustment each year are renewal that raises the values that the premium calculations are made against to help keep their risk in line with inflation, etc. (that's the primary reason that the premium adjusts upward each year on these policies, independent of overall rate adjustments which some folks are getting smacked hard with, depending on where they live.

The data they are asking for, however, is to establish how much it's going to cost you for that coverage. If you had a brand new roof, for example, it's likely your premium quote would be slightly lower than it would be with an older roof. Why? Because a newer roof is less likely to fail if struck by debris or hammered by heavy wind.

[Stan Calow]

We get a lot of hail and storm damage in this area almost every year. In fact there are about 15 homes in my subdivision getting new roofs as we speak. If everyone got a full replacement after each storm, that would be like the homeowner never having to buy a new roof, as no roof will be undamaged for long. That doesnt sound sustainable.

I think it's a racket. Insurance companies around here (including the majors) will often rely on contractors' inspections and reports not their own adjusters, despite what the commercials show. When I had some damage several years ago, the insurer said they would only pay for $2000 of repairs (and not for any old damage) and the contractor I chose just replaced $2000 worth of shingles.

[Doug Garson]

We get a lot of hail and storm damage in this area almost every year. In fact there are about 15 homes in my subdivision getting new roofs as we speak. If everyone got a full replacement after each storm, that would be like the homeowner never having to buy a new roof, as no roof will be undamaged for long. That doesnt sound sustainable.

I think it's a racket. Insurance companies around here (including the majors) will often rely on contractors' inspections and reports not their own adjusters, despite what the commercials show. When I had some damage several years ago, the insurer said they would only pay for $2000 of repairs (and not for any old damage) and the contractor I chose just replaced $2000 worth of shingles.

I'm confused, what's the racket? Are you saying the contractors are ripping off the insurance companies?

[Stan Calow]

I'm confused, what's the racket? Are you saying the contractors are ripping off the insurance companies?

If the insurance company doesn't use their own adjustors and depends on a roofer's estimate, I see the roofer has incentive to overestimate the damage. Probably not fair to assume they would do so.

[Doug Garson]

If the insurance company doesn't use their own adjustors and depends on a roofer's estimate, I see the roofer has incentive to overestimate the damage. Probably not fair to assume they would do so.

On the other hand, the insurance company's adjuster would be incentivized to underestimate the damage. In that case the roofer would then be incentivized to cut corners in order to not exceed the estimate by the insurance company. I think the homeowner is better off with the roofer's estimate.

Not a roofing job mut we had an insurance claim a few years ago for a plumbing leak. Not sure who set the budget but the restoration company replaced flooring well beyond where we thought the leak penetrated.