Learn a new impact of bad weather on good business for licensed roofers.
Read about a few changes in the property insurance market that affect claim payouts.
For licensed roofing contractors, bad weather means good business. Until recently, property insurance companies routinely authorized the replacement of insured residential and commercial roofs damaged by wind or hail. Property insurance policies are undergoing major changes that limit the amount an insurance company will pay for damage due to these perils, which impacts the business of licensed roofing contractors.
The practical effect for contractors is knowing with certainty who is going to pay for what. Property insurance has never covered all causes of loss. For example, loss due to wear and tear is not covered by insurance. Proper maintenance is an ongoing cost of property ownership. Increasingly, insurance companies are hiring consultants to determine if damage is due to wear and tear and denying payment for loss in which neglect is a main factor.
While wind and hail are covered perils, insurance companies are limiting coverage that previously applied to these specific perils. Before starting any job, you should verify exactly what your customer’s insurance will pay and what is the customer’s responsibility to pay. The table below highlights three key points to consider before starting any job. Bear in mind that the actual policy terms, conditions, and limits of each individual customer always apply.
Terms and Conditions of Customer’s Property Insurance Policy |
Impact for Licensed Roofing Contractor |
Actual Cash Value (ACV) Basis or Replacement Cost Basis NOTE: ACV is becoming commonplace for roofs aged 15-20 years and older. |
Difference in claim payout between the two is substantial. An ACV policy pays out several thousand dollars less on a covered claim. Customer must have financial resources to pay the difference for a roof replacement. |
Settlement terms regarding labor cost. | Some insurance companies are amending settlement terms applicable to ACV covered losses so that labor, in addition to materials, is discounted. If the customer cannot pay the full labor cost, the contractor has an additional business consideration respects whether or not the job can be performed profitably. |
Policy deductible. Many insurance companies are requiring a separate deductible applicable to damage due to wind or hail, which is at least $1,500. per wind/hail loss, but may be much higher. | Verify what deductible applies and consider requiring customer pay you that amount before starting a job. |
Every home and business needs a good roof overhead. As a licensed roofing contractor, be aware of impactful changes in the property insurance market that affect your own bottom line.
Richey-Barrett Insurance is a Trusted Choice Independent Insurance Agency for many types of contractors, roofing and otherwise. We don’t just sell insurance; we try to educate our customers about insurance and consequential trends in the insurance marketplace.
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