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Insurers Becoming More Restrictive on Roof Replacements
In most parts of the country, spring and summer can be punctuated by severe storms with wind and hail. These storms often are followed by contractors traveling through neighborhoods claiming that they can get your insurance company to pay for a new roof on your house because of storm damage.
Don’t count on it. Unless you have a new roof that was seriously damaged by hail or wind, you could end up disappointed when you settle the claim. That’s because insurers are becoming much more restrictive in handling roof claims. For example, some carriers:
The insurance industry’s restrictions are in response to several events. First, Superstorm Sandy and other severe weather have hit carriers with heavy losses related to wind and hail.
- No longer write new policies for homes with wood shake roofs; existing policies for homes with wood roofs face significant rate increases.
- Settle claims on roofs that are more than 15 years old on an actual-cash-value basis rather than a replacement basis.
- Are charging a separate, higher deductible for wind and hail damage, often a percentage of the total insured value of the home. This is becoming increasingly common in coastal areas, where some insurers no longer write coverage for wind and hail damage at all.
In addition, despite significant increases in rates, most insurance companies do not make much – or sometimes any – profit from homeowner coverage. Homeowner coverage is basically replacement coverage, which means that the policy might end up paying much more than the current value of your home. This is especially true now, when many homes have declined in value. In contrast, if the cost of fixing your car is greater than the value of your car, your insurance coverage usually declares the car a total loss and pays only the actual value rather than the cost of buying you a new car.
And finally, insurers historically have made money from investing the money they get from premiums, and that investment income has helped to offset the cost of claims and provide insurers with a profit. However, the recent down cycle in the market, especially the fixed-income market, has seriously eroded this source of capital for insurers.
At The Bensman Group, we work with you to find the best insurance, including homeowner coverage, for your particular situation. We discuss your options and make sure that you understand the structure and limits of the coverage you choose. Then we act as your advocate with the carrier. To discuss your homeowner coverage, or any other insurance question, contact us at 847-572-0820 or email@example.com.