- Educate Yourself - Choose a Reputable Contractor - Determine if You Have Any Damage - Settle Claim with Your Insurance Company - Get Back to Good as New with Less Stress
A large storm has rolled through and you're concerned that your home may have sustained damage from high winds or hail. Now What?
Take a deep breath! You will probably see brochures and business cards cards left at your front door along with sales people knocking on your door. You may even receive phone calls, all the while thinking how did they get my phone number? Contractors will certainly come out of the woodwork after a major weather event making all sorts of claims and promises.
Relax, there is no need to feel anxious or make immediate decisions. Unless you have a tree sticking into your home or a giant hole in the roof, you don't have to make any decisions right now. Don't let anyone tell you otherwise! You have all the time you need to make the best decisions and ensure you get any required repairs done correctly and fairly.
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.
Step 2 - Choose a Contractor
Take a moment and consider these key points:
1. Texas has no registration or licensing requirements for exterior or restoration contractors (although your City may).
2. It is estimated that 80% of roofing contractors are out of business within 5 years.
3. Should an accident occur, you may be held liable if the contractor fails to carry general liability insurance or too little coverage.
4. If a contractor is willing to defraud an insurance company in any way, they very well could be willing to do the same to you.
5. After a storm, anyone with a pickup truck and a ladder can and does claim to be a contractor.
Researching your potential contractor choice is imperative. Luckily doing research online makes this reasonably accessible to do. Check the Better Business Bureau profile, search for online reviews to see what past customers have to say, ask for a copy of their insurance with you added as a certificate holder, and confirm if the contractor is registered in your city to be able to pull appropriate permits.
Step 3 - Assess the Damage
If you find shingles scattered around your yard, that is fairly easy to identify. Hail damage is quite often not as easy to see from the ground. Hail can ruin your shingles by breaking the fiberglass mat that holds the shingles together. You may have also had significant granule loss that can lead to premature failure and over time eventually result in leaks occurring.
Some good ways to self assess whether you may have roof damage:
- Check for tree limbs or whole trees down in your yard.
- Look around your yard for things within reach that you can check whether they are chipped, cracked or broken. Items like yard ornaments, patio furniture or table tops.
- If you have gutters, look at the outlet for the downspouts to see if you have a large amount of shingle granules pile up on ground. Also, look at gutters and downspouts themselves for any dents.
- Check wood fencing for signs of impact and scarring.
- If you had a car parked outside during the storm look it over for dents or shipped/broken glass.
The absence of those items doesn't necessarily mean your roof didn't sustain damage, but it gives you a quick way to do a brief initial check from the ground. The most effective means of determining damage is to have your contractor perform a thorough inspection on the roof itself. If you have any concerns or doubts at all about whether damage occurred, leave it to someone who knows what they are looking for. Hail damage can sometimes be difficult to identify. What may look perfectly fine cosmetically can come back to haunt you in years to come. A contractor with integrity will gladly tell you upfront that no damage exists.
Some contractors that offer to inspect your roof may attempt to have you sign a contract before your claim is approved. They do this in an attempt to make you feel obligated to do business with them in the event you ultimately have an approved insurance claim. That is never recommended! A respectable and quality contractor will be willing to work with you and provide assistance without making that kind of request.
Step 4 - Settle the Claim and Get Restoration Project Started
Once you feel comfortable that your concerns warrant filing a claim, you will need to contact your insurance carrier to file a loss claim. If you regularly work with an insurance agent they typically do not have the ability to assist with claims. You will need to call the insurance carrier directly and speak to their claims department. Your contractor cannot file a claim for you. In the state of Texas your contractor cannot legally advocate on your behalf or engage in any aspect of your claim negotiations. If you have a contractor offer to do so you should be concerned that they either don't know basic industry laws or that they may have some arterial motive that is not in your best interest.
Once the claim has been opened an adjuster will be assigned and an appointment made for them to inspect your property. The adjuster will make their evaluation for the insurance carrier. Upon receipt of the claim determination you should review it thoroughly with your contractor. It is always a reasonable concern that an adjuster may have missed something. You deserve a fair settlement for your claim. If for some reason you feel uncomfortable with the adjuster's report you have the ability to request a re-inspection.
With an approved claim you will be ready to review the scope of repairs with your contractor. You will need to complete a written contract with your contractor so that the materials can be ordered and the repairs scheduled. Verbal agreements are hard to enforce and you should never be willing to allow a contractor to work for you if they aren't willing or expedient in documenting the entirety of your agreement with them. That is a big red flag!
A great and ethical contractor will utilize the highest quality materials and craftsmanship possible for the amount of money involved. Be careful for the all to common practice of contractors that will specify the cheapest materials and methods possible while wanting to collect the full insurance proceeds that should have provided better quality. Be sure you receive a copy of everything you sign and don't sign anything until all of your questions and concerns have been addressed.
Your insurance carrier will probably immediately mail you a check for the Actual Cash Value of the approved claim, minus the applicable deductible. If you have a mortgage on your home, it is likely that the check from the insurance company will have both your and the mortgage companies name on it. In that instance you will need to contact your mortgage company and find out how to go about getting their endorsement on the check. Once you can deposit the check you should do so. Cashing the first check from insurance does not obligate your acceptance of the claim settlement.
When paying your contractor you should use a personal or cashiers check so that you have your own record of all payments. Avoid signing over a check sent to you by your insurance carrier. If a contractor acts like they can deal with the mortgage companies endorsement or ask to hand over the insurance check, that is a big red flag!
You also want to be very careful about down payments. A reputable contractor will not ask for any payment until the finalized contract is signed. A deposit of 20-30% is not uncommon and should be sufficient in most circumstances. It is also not unusual for some contractors to go ahead and collect the entire amount of the ACV check that was received, while some contractors may require no payment until completion. It really depends on how detailed and time consuming the project is. If a roof will be replaced in one day and that is the only component of the project then paying in full on completion is reasonable.. You have to use strong personal judgement here. A financially stable contractor will have the ability to complete your project without requiring a large down payment.
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