Even though the spring hail storm season was almost coming to a close, Denton got hit by yet another large event with some baseball sized hail. Most Texans have seen hail, but when they get to baseball size, the noise and roof-related claims kick up to another notch. This strong storm had left a path of severe damage as it moved up the HWY 377 corridor right into town. And our friend Jeff was left shaking his head once again at the thought of making yet another claim for roof damage.
Jeff has always taken pride in maintaining his property. His yard regularly wins the best in the HOA contest. He is continually doing little things to make it not only his own, but his pride and joy. He is part of what makes his community great. However, the frequent hail storms along the Red River and points just south have taken a toll on his roof.
Jeff has found himself making a claim every three years due to the frequency of the severe storms producing enough damage. Jeff had heard one of his neighbors say that switching to a roof payment schedule on his homeowners insurance was bad. He trusted his friend, but he also wondered if it really matters if he makes a claim every three years? Especially with insurance rates becoming more insane each year.
After filing yet another claim that includes him paying yet another hail deductible he decided to do some investigation. Jeff knows that he could potentially see a significant drop in the payout of his insurance claim process. But Jeff felt frustrated and worried about how all of this would impact his finances in the long run. So what is the best approach? Especially with roof coverage becoming so confusing!
Understanding Insurance Policies and Coverages
Texas home insurance companies are constantly changing their policy coverage in an attempt to better manage costs. The high frequency of hail claims has caused the insurance providers to lose money hand over fist. Since hail damage is the most common type of claim made in Texas, the insurance companies are seeking ways to reduce the costs associated with these frequent and expensive claims to find profitability while keeping insurance rates from increasing even more.
A roof payment schedule is one strategy these companies use. Essentially, a roof payment schedule reduces the amount paid out on roof claims based on the age of the roof. The older the roof, the less the insurance company pays. This means higher out-of-pocket costs for homeowners like Jeff, who frequently face severe weather in Texas.
Actual Cash Value Coverage vs Replacement Cost Coverage
When it comes to roof claims, understanding the difference between actual cash value (ACV) coverage and replacement cost coverage is wildly important. ACV coverage pays out the depreciated value of your roof based on its age. Roof replacement cost coverage pays to replace your roof at current market prices, regardless of depreciation. As your home and roof age, this can have a massive effect on your out of pocket costs of roof replacement.
The way that Texas homeowners policies are being constructed these days, the age of your roof will affect your eligibility for replacement cost coverage. If your home is deemed too old, your policy will include a depreciation schedule to determine how much money you receive for your claim. This will often leave homeowners with substantial out-of-pocket expenses. Understanding these differences can help you make more informed decisions about your coverage options.
Roof Payment Schedules and Their Significance
A roof payment schedule on a Texas homeowners insurance policy is really a play on words. The play on words is that it means your standard home insurance policy will include an actual cash value provision. This drastically reduces claim payments as your roof ages, which can leave you with significant repair costs. For instance, a roof payment schedule might only cover 50% of the replacement cost if your roof is seven years old. While some policies may offer replacement cost coverage for roofs less than 10 years old, it's essential to understand that this coverage will diminish as your roof ages. This is the part that worried Jeff. He didn't want to be left holding the bag without roof replacement coverage.
How Roof Age Impacts Insurance Claims and Coverage Options
The age of your roof significantly impacts the risk that you will be calling a roofing contractor after a storm no matter the type of roof that you have. Obviously, metal roofs and other more durable products can hold up over time. But as your roof ages, your probability of insurance claims goes up and your coverage options dwindle. Different home insurance companies have varying age requirements for when a roof payment schedule must be applied.
Since the risk of damage from hail increases as your roof gets older, the companies are charging higher premiums and increasing coverage limitations. With coverage limits like higher deductibles and roof payment schedules become mandatory after 10 or 15 years, keeping an older home insurance policy that does not mandate these change is incredibly valuable. This allows you to maintain adequate coverage without facing drastic reductions in claim payouts as your roof ages. The trade off is that the insurance premiums for these policies can be increasingly expensive. This is why we will advocate that you actually not change away that RCV policy even if it means you will not become our customer.
Importance of Choosing the Right Coverage for Your Roof
Not all insurance policies are created equal. Jeff was asking in depth questions about his insurance coverage options when he called our office and we worked diligently with him to find a solution to his questions. Working with an experienced independent insurance agent allows you to compare different policies and see their nuances. Which brings us back to Jeff's original question about whether roof payment schedules really matter if you file claims for wind or hail every three years.
A roof payment schedule can leave you with just 50 cents on the dollar for a roof that is seven years old. But what about that three year mark? If your roof is composition, which is a vast majority of Texans, the average depreciation is around 10% to 15% depending up on the company that you have coverage through. Not a terribly large amount when considering claims for roof replacement are easily $20,000 on average sized homes.
The other side of the coin is that the premium savings is going to be very meager as well. The major savings on your annual premium will be found in those later years where your roof is older and the depreciation schedule begins to steepen. And once you have established your policy with a company that has a roof payment schedule, you will not be able to shift back to replacement cost claim settlement. Jeff ultimately decided not to change from replacement cost to the schedule.
Remember that different companies have different parameters for roof age and how it affects how they handle hail claims. That means you cannot assume that a specific type of coverage is included in your policy. It's essential to be cautious when signing a home insurance policy, as you need to ensure it meets your needs without hidden drawbacks.
Get TRUE Texas Home Insurance
TRUE Texas Home Insurance offers replacement cost on roofs, comprehensive water coverage, and the lowest available deductibles in your area. This policy, regardless of insurance company, focuses on making sure that the homeowner understands the value they receive rather than just the premium. Our agents will customize homeowners insurance coverage to meet the specific needs of Texas homeowners as everyone is unique. TRUE Texas Home Insurance can only be found at Insurance For Texans. Our home insurance specialist tailor coverage that protects your home from the frequent weather-related claims common in Texas.
Working With Insurance For Texans
TRUE Texas Home Insurance is exclusively available at Insurance For Texans. Working with a local, independent insurance agent offers several advantages. These agents work for you, not a large insurance company, making sure you receive the best possible coverage options.
Insurance For Texans agents are committed to providing personalized service and expert advice, helping you navigate the complexities of home insurance to find the policy that best fits your needs.
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