I recently had to inquire about replacing my roof with my insurance company. I had a roof guy out to my house to tell me about the damage, gave me the date of different issues I could claim. I had bent back shingles and asphalt had flaked off of a lot of major parts. I also had dents in the shingles indicating hail damage.
After everything was done, he left and wrote up an entire report and gave me a speech for when I call the insurance company. I thought, "this is crazy, right?". We're gearing up for war trying to gather information on getting my roof replaced. It was like a crime scene. He had chalk lines around all the hail damage and smudged the wind damage so it wouldn't look as exciting. On my personal home insurance hail is a 1% deductible and wind damage is a 2% deductible.
Not so obvious to me at the time the insurance company will push to do the wind damage replacement. Same replacement, but as a homeowner, I would be on the hook for more money out of pocket, on top of the $1,200 per year that I pay them to cover stuff like this. It's just a business this them. They're not "protecting an investment", they're just keeping their bottom line as low as possible.
So the next step after he sent the document I was supposed to call the insurance company and read the script to them that I need my roof replaced based on the hail damage specifically. They would have a rep come out to verify and my roofer would meet him there to walk him through the damage he saw and the determination he made. All to sway this guy from charging me an extra $1,000-$2,000 for the roof.
On top of that, you're thinking you're now also responsible for a higher premium because of the new roof right? File a claim, premiums go up. That's how it is. Your insurance company might take advantage of that as well, but you could actually qualify for a discount due to the renewed protection offered by a new roof so keep that in mind.
Not all Insurance is the Same
Remember how I said I was supposed to call the insurance company to have them come look at the house? I actually didn't get to that step. The roofer casually asked what insurance I had for which I had to dig through a mountain of paperwork to find. He immediately told me there's no point in pursuing this claim because my company would not payout. On top of that, it's a company that always pushes repairs over replacement no matter how bad the roof is meaning you're dealing with reoccurring issues for 5 years on a 14-year-old roof.
In my situation, it made perfect sense to dump my insurance company and go with someone more reputable. As wild as it seems, I ended up bundling with car insurance through Geico and saving about 15%.....Even with that savings I was also now getting that higher dwelling coverage where before I had agreed to a lower premium not realizing my dwelling coverage was down to 80% of the home value.
Filing a Claim will Hurt
Always look for different alternatives to filing a claim if you can. In a lot of situations having a bunch of claims makes you look bad to further insurance providers. I would say if the cost is only slightly more expensive than you're deductible, even up to a couple thousand dollars you should look into covering the work yourself. Home insurance is meant for catastrophic loss situations and not your everyday home repairs.
Damaged flooring or blown water heater? It's probably not worth bringing the insurance company into the mix so keep that in mind when you're figuring our new savings system. Now going down that road you might find yourself coming across different ads for home warranty coverage. This is the same situation and you should carefully consider your options before putting your eggs in that basket.
In a lot of situations, DIY home repairs can be a great solution to the money cost here. I plan on replacing my small privacy fence in full for $1,000 next summer in different increments. I'm not looking at bulk purchasing lumber or any savings related to that stuff, and I come out to just over $1,000. I got a quote for the same basic work and it was over $3,000 to bring a team. A new water heater can cost over $2,000 to replace, but depending on your skill level you can do the same work for around $600 - $800. The list goes on and on and you take every opportunity to add a new skill to your toolbelt.
For a damaged roof you will most likely want to turn this into a claim. A new roof in my area on a 1500sqft home is about $9,000 depending on the shop. The deductible I'm looking at is $1,000. On top of that as I mentioned above you might qualify for reduced premiums with the safety the new roof brings.
Lessons Learned
Check your insurance rates annually - Some insurance companies raise rates annually. Partially because we expect it, and partially because of rising material and labor costs. Shopping around will tell you if this is normal or if it's time to jump ship.
Review dwelling coverage - Make sure you're covered for at least 120% of the replacement of your home. Again, prices go up over time meaning it's possible it could cost more to replace your home than the insurance is responsible for giving you. My current dwelling coverage on my $200k home is $280k. I'm covered there. I always insurance my rental properties with landlord insurance at 80% replacement cost and I'm comfortable with that for those properties.
Talk to local roofers - As you can see from the perfect example above, right off the bat my local roofing company was able to tell me I had made a bad choice in coverage which was actually the recommendation of my lender. Make sure to do your own research. He was able to give me a list of national companies and local companies that he's never had issues with and I made an informed decision from that point.
Don't call your Insurer
If we've learned anything through this it's that we're better off finding a different way to get household issues taken care of. Don't rely on a third-party company to take care of you when your life is the one that's on the line. Establish a financial plan today as a homeowner to take care of these major expenses well before they come up and become a larger issue.
In those rare scenarios, you might find yourself at a loss if it's something you should report or if you should just keep it to yourself. Call around to your local trades for opinions and give your insurance company a call. If they're a good group of people they should have no problem telling you how much your insurance will go up or if it's worth hitting your deductible this late in the year, which is almost always no.
You've got the skill and the knowledge to manage all of the situations, but it's about being prepared when an issue happens. Now you know to take these issues into your own hands and can tackle them as a responsible homeowner. Happy Spending!
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