Can I Keep the Money?
Insurance and Mortgage companies have come up with ways to make sure the money is spent for the approved items in the adjuster’s report.
The main way they have done this is by giving the homeowner an initial, partial-payment check minus the deductible. The amount they come up with is the market-value cost of replacement less the depreciation. By withholding the depreciation until the work is completed, they ensure that there is not enough money to get the job completed professionally and usually just enough to get the job started.
When it comes to replacing your roof after it has been deemed replaceable by the insurance company, don’t waste much time because there are time limitations and a roof is a major undertaking and a very costly expense. It is in your best interest to get a professional roofing contractor with the experience in dealing with the insurance companies to make sure your property will be restored properly.
Do I really need to get 3 bids?
Price shopping is rarely ever in your best interest when dealing with an insurance claim and here is why.
Your insurance company agrees to pay for your property to be restored with like/kind and quality materials at “fair market value” pricing. The ONLY amount you are required to pay is your deductible.
Here is an example:
Your adjuster says the total cost for your roof is $10,000. You also have a $500 deductible. They are saying the “fair market value” for your roof should be $10,000. If you paid a roofing contractor the entire $10,000 then $9,500 was paid by the insurance company and $500 paid by you.
Let’s say you get an estimate for $9,000 from a contractor. First off, this could be bad for multiple reasons but we will get to that in a second. Well, guess what? You still have a $500 deductible. Therefore, the insurance company will pay $8,500 and you will still only have to pay $500 which is a total of $9,000.
The difference between an estimate of $9,000 and a “fair market value” estimate of $10,000 is quite drastic. When using a reputable roofing contractor, the best available materials and labor will be used to fix your roof. If someone is willing to do it for $1,000 less, buyer beware. They are likely inexperienced and won’t be around for long which is not good for maintaining warranties. They are also using inferior materials and possibly skipping out on some materials altogether therefore cutting corners. On most people’s largest investment, cutting corners is never the way to go.
My First Claim Check
The first check, minus your deductible, is usually only enough for the contractor to buy materials and get the work started.
If you have a mortgage, the check will be co-endorsed to you and the mortgage company. You will need to notify them and ask them what steps you need to take. Note: that each mortgage company is different and may require different items from you. If your check is not co-endorsed, simply deposit it into your local bank. Your bank may or may not have a policy of holding insurance funds for 7-10 business days or sign the check and hand it to your contractor.
After all the work is completed and you are satisfied. We then submit the necessary paperwork to the insurance company to get the second check containing the Recoverable Depreciation and any necessary supplements.
What is Depreciation and Why Did They Keep It?
Depreciation is the decrease in value of property over a period of time due to wear, tear, condition, and obsolescence. A portion or this entire amount may be recoverable for replacement cost benefits. This amount is released when the job is completed and all invoices have been submitted to the Insurance Company.
Most policies cover full replacement cost minus your deductible. If you are not sure which policy type you have, ask your roofing contractor or adjuster.
If you do not use all of your depreciation to get your home repairs fixed, your insurance company will subtract your deductible from the final lower-priced invoice rather than the total claim originally allowed.
That is why it is so important to have a professional contractor restoring your roof to industry and manufacturer standards. By using the insurance company’s fair market pricing, you are ensured that no corners are being cut when someone gives you an unnecessary low bid.
3 Quick Depreciation Tips:
- Depreciation is the amount of money withheld from you until the work is completed. By holding the depreciation, your insurance company ensures that they pay only the balance and not your deductible.
- Your Insurance Company will match, not exceed your roofing contractor’s “fair market value” bid, less your deductible.
- If you do not spend all of the money allowed for each item, your Insurance Company keeps the difference and pays the balance to only what has been done.
What is a Supplemental Claim?
A supplemental claim is an additional request of payment to the Insurance Company for rising material and labor costs or items that were overlooked and/or not visible during the original inspection. When a supplemental is paid, your Insurance Company will agree to issue a third check beyond the original claim to help your contractor cover these rising or unforeseen costs. A supplement ensures that every detail will not go unnoticed and your home will be fully restored without cutting corners.
What is My Roof Deductible?
Your deductible is a predetermined amount the homeowner agrees to pay during any insurance claim. The Insurance Company pays everything else above that amount. In some cases, your roof may have a different deductible amount than other areas of your home policy. Starwood Roofing will work with you to help you get your home fixed. All you are responsible to pay is your deductible- that’s it, nothing else.
Starwood Roofing will walk you through the claims process step-by-step and handle all of the hard work to make sure your home gets the attention it needs