Roof Damage, Insurance to claim or Not to claim

[Naveen Desai]

Hello, 

     Back in August we had some roof damage to one of our rental in Dallas region. We got an estimate from a roof repair company and the estimate came to 12K.

We got the insurance involved and while they agreed on the damage they deducted the amount based on life of roof and then gave an estimate of approx 8k.

Then I am now at the point where I have to sign Proof of Loss statement to get cash claim and they further subtract the deductible of 3K, and effectively giving a cash $ amount of 4K+. 

While taking cash is always good, do I loose on anything if I claim from insurance?  Is the insurance company practice of deducting the amount due to life of roof initially and then the deductible proper practice? 

Any advise if I should claim and cash out and put 8k to get it repaired or any other options? 

Thanks. 

Naveen. 

[Jon Holdman]

If you're worried about the insurance company holding the claim against you, too late.  Even if you withdraw the claim now, it was still filed.

Yes, what happened to you is how it works.   They figure out the replacement cost of the roof then divide it into the actual cash value based on the age of the existing roof and the remainder of the replacement cost.  They will pay out the actual cash value right away, less your deductible.   Once you get the roof fixed, they will pay out the remainder of the replacement cost.  In my experience, as soon as you have a signed contract to get the roof replaced they pay out the remainder.  So, in the end you get the total replacement cost, less your deductible.  Further, roofers will generally find some additional costs and will file "supplements" with the insurance.  If the insurance company agrees, the will pay this out, too.  Best to get these supplements sorted out before the roofer actually starts work. 

That assumes you have replacement cost coverage.  If all you have is cash value coverage, all you're getting is the cash value, less deductible.

Now that you've filed the claim, if you try to file another roof claim on this property they will want to see proof it was repaired.  No repairs, no more payments.  And, at some point, they might refuse to renew your policy if you don't fix the roof.

If you have any mortgages on the property, the checks will be made out to you and the lender(s).  The lender will have some procedure for getting the checks endorsed.  In some cases, they will insist the YOU endorse the checks and send them to you and then the lender will pay for the repairs.

I have been led to believe by my current roofer they will actual replace my roof next week. From damage back in May. This can be a slow process.