We have talked a lot about roofs to our customers in the last couple of years. The reason is that we have replaced so many roofs because of straight line wind and hail damage. In my agency alone, we have replaced over $1,000,000 in roofs in the last 24 months. The costs to insurance companies for roof replacements has been one of the main culprits that has caused homeowners insurance rates to escalate at a much higher pace than normal in recent months. Frankly, insurance companies are tired of replacing roofs and the costs associated with them. That is why many companies just aren’t paying for full replacement costs of roofs any longer. They have gone to an Actual Cash Value (ACV) settlement basis. I explain it this way: Joe Homeowner has a 10 year old roof that has an actual cash value replacement of around $8,000. A storm comes along that causes serious damage to that roof either by wind or hail. Some of these insurance companies now would appraise the loss at $20,000 to replace the roof. But because they no longer pay for the replacement any longer, they pay the actual cash value amount of $8,000. That leaves Joe Homeowner in a really bad place. He pays the balance to get his roof replaced – $12,000! Ouch!
My companies have not gone to that ACV settlement basis yet. They are still paying for full replacement cost. However, some are changing their deductible requirements to have a higher deductible for Wind/Hail losses. Most are using $2500 to $3000 deductibles for Wind/Hail as the minimum available. That keeps their company still paying for full replacement but places some added responsibility on the insured to carry a little more of the load. There also is a slight premium reduction on the home policy cost because of that required Wind/Hail deductible minimum.
This is a key component of how homeowners insurance rates are priced right now. Companies are still researching alternative ways to insure our homes and are trying to protect themselves from further financial pitfalls by adjusting some of these coverage’s. We’ll hopefully see a settling down of these issues in the next 12 months. Of course, it mostly depends on how gentle our weather patterns are in this Middle Tennessee area as we go along. The more calm/non-claimable weather we experience, the better chances we all have in filing less claims and having higher premiums as a result. One can only hope!
We work hard to be sure our customers are best served with the best coverage’s for the lowest premium dollar! It is still our pleasure to fully cover roofs and hopefully, we’ll be able to continue to to do that in the future. If we can help you with insurance of any kind and quote some of our competitive rates for you, we’re ready to earn your business. Contact us at info@BentonWhite.com or call us at 615.377.1212.
