Do You Understand How Your Insurance Policy Pays Out On Roof ClaimsAdvisor Insurance Agency Blog

Do You Understand How Your Insurance Policy Pays Out On Roof ClaimsAdvisor Insurance Agency Blog

It is early spring here in the Ozarks, sunny days, warmer weather and storms on the horizon.  Storms are the nemeses of insurance companies, as they have the ability to cost insurance companies a lot of money, quickly.  They also inspire people with pickups, clipboards and cell phones to become instant contractors.  These people roll into a hail damaged town, make promises to wave deductibles, do spotty work and are never seen again leaving you to hope the work was done correctly.

One thing that will help us as we move into this storm season is if we know how our insurance policy will work during a claim.  Keep in mind an insurance policy is a black and white policy that sets the floor, or least amount, an insured or insurance company can do.  When times are good insurance companies seem to pay more than is expected in the policy and when times are bad they tend to follow the letter of the policy.  So let’s assume we had a wind storm that damaged the west side of my 9 year old roof.  What does the policy owe for based on Insurance Service Offices HO OO 03 (all companies are slightly different but this is a generic base policy):

Under  Section 1-Conditions

C: Loss Settlement

2.  Buildings covered under Coverage A or B at replacement cost without deduction for depreciation, subject to the following:

a. If at the time of loss, the amount of insurance in this policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of any deductible and without deduction for depreciation, but not more than the least of the following amounts:

(1) The limit of liability under this policy that applies to the building;

(2) The replacement cost of the part of the building damaged with material of like kind and quality and for like use; or

(3) The necessary amount actually spent to repair or replace the damaged building

d. We will pay no more than the actual cash value of the damage until actual repair or replacement is complete.  Once actual repair or replacement is complete, we will settle the loss as noted in 2.a and b above.

Wow, that was clear, so what does that mean? Well according to the policy above, the insurance company would owe for the repair or replacement of the damaged roof minus my deductible.  So if the west slope of my roof is 6000 to repair and I have a $1000 deductible the insurance company only owes $5000 in total.  However according to letter (d) above the insurance company only owes a portion of this until the work is finished.  So if my 20 year roof is 10 years old the insurance company owes $3000 and the rest when I prove the repairs are made.

Now what if a roofer says I need a whole new roof because of the age of the roof but still the damage is on the west side?  The Missouri Department of Insurance actually has that answer on the frequently asked Questions portion of their web page.  Here is what they have to say:

“The company is not responsible for repair or replacement of the roof unless it is damaged by a covered peril. The policy does not provide coverage for repair/replacement that is due to ordinary wear and tear or from lack of maintenance. The company can authorize repair/replacement for just that portion of the roof that was damaged by the covered peril.” www.insurance.mo.gov/consumer/faq/hofaqs.htm

So the Department of Insurance is clearly saying the insurance company only has to pay for the damaged portion regardless of the roofers feelings.


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