Homeowners Insurance Roofing Claims
Your home is likely your most valuable asset. That’s why you buy homeowner’s insurance, to protect your investment should the unexpected happen. But if you’re like the majority of homeowners, you’ve purchased the policy without really understanding how it works. At Carroll Bradford Roofing, we’re big believers in the empowering force of knowledge. That’s why we put this guide to help you better understand homeowners insurance. Including how roofing claims work and the three most important terms to you need know: deductibles, ACV and RCV.
How Homeowners Insurance Protects Your Roof
Typical homeowners insurance policies provide benefits to protect your roof from specific perils, which are certain risks or events that could damage your home. Some of the most common covered perils include hail, wind, and fire damage. Some insurance policies may have exclusions that limit the coverage offered. For example, if your insurance policy has a windstorm exclusion, any damage caused by a windstorm wouldn’t be covered. Always read your policy thoroughly and check with your insurance agent to identify covered perils and any exclusions on the policy.
Deductibles 101: What You Need to Know
For any claim you file, your deductible will come into play. A deductible is an amount you have to pay out of pocket for your covered claim. Therefore, it helps to know your policy’s coverage limit. A coverage limit is the absolute top end your insurer will pay for a covered loss. For example, let’s say you have a $15,000 claim and a deductible of $5,000. Your insurer will cover $10,000 of the damage and you will be responsible for the remaining $5,000. However, if you have a coverage limit that’s lower than that, your responsibility may be more.
ACV vs. RCV
When purchasing your homeowner’s insurance policy, one of the most important decisions you make is deciding between a policy that covers actual cash value (ACV) or one that covers replacement cost value (RCV).
ACV costs less and your annual homeowner’s insurance premium will be more affordable. However, claims are paid based on the depreciated value of your home and belongings. RCV costs more but it does not count depreciation when paying your claims. Instead, these policies issue payments for what it costs to replace your belongings, and your roof, up to the coverage limit on your policy.
Example
A helpful example is if two neighbors both bought new roofs at the same time and later suffered from storm damage. Neighbor A has a homeowners insurance policy with ACV coverage and a $2,000 deductible. Neighbor B has RCV with a $2,000 deductible. Let’s say the roofing cost both neighbors $18,000 a decade ago and today it needs to be completely replaced. For neighbor A, the insurance company will reduce the payment by a set amount for every year that’s gone by. Here’s an example of what that could look like.
Neighbor A’s Insurance Claim:
- Roof cost: $18,000
- Depreciation schedule: $1,000 per year
- The total cost of repairs: $18,000
- Deductible: $2,000
- Insurance pays: $6,000
- Homeowner’s responsibility: $12,000
Neighbor B’s Insurance Claim:
- Roof cost: $18,000
- Depreciation schedule: $0 per year
- The total cost of repairs: $18,000
- Deductible: $2,000
- Insurance pays: $16,000
- Homeowner’s responsibility: $2,000
Understanding your insurance policy is important. As you can see, your deductible and whether you choose ACV or RCV can have a huge impact on what you’ll be paying if damage occurs.
At Carroll Bradford Roofing, we’ve been trusted for Central Florida roofing for decades. Whether you need an inspection, repairs, or replacement, we’re here for you. Learn more at cbroofing.com.
References:
https://www.allstate.com/tr/home-insurance/home-insurance-cover-roof-damage.aspx
https://www.allstate.com/tr/home-insurance/perils.aspx
https://www.nerdwallet.com/blog/insurance/understanding-homeowners-insurance/
https://www.bankrate.com/finance/insurance/roof-insurance-acv-vs-replacement-cost.aspx
