Roof Coverage 101

It’s a trend that many—especially those in the insurance industry—have been paying attention to for a while now: Every year, severe weather events have been increasing in frequency and cost. In 2017 alone, according to the National Oceanic and Atmospheric Administration (NOAA), the cumulative cost of severe natural disasters exceeded $300 billion, which was a new record; the previous record had been $214.8 billion in 2005, when Hurricanes Dennis, Katrina, Rita and Wilma occurred.

Because of the increasing frequency of weather events such as these, and because the roof is the home’s primary defense against weather losses, it’s more important than ever to know what kind of insurance coverage you have on your home. However, many individuals admit to being unaware of what’s covered (and, more importantly, not covered) under their insurance policies.

So, let’s start with the basics.

Actual cash value vs. Replacement cost value

If a covered loss occurs (like a tree falls on your house), your insurance company will pay for it in one of two ways:

Actual cash value (ACV): The amount it would cost to repair or replace the damaged property with material of like kind and quality, less deduction for reasonable wear and tear, deterioration and obsolescence as well as your deductible. At the time of a loss, an insurance company may consider your roof’s age, wear and tear and deterioration when determining its value, which means that you may have a larger out of pocket expense.

Replacement cost value (RCV): The cost, at the time of loss, to repair or replace damaged property with new materials or like kind and quality, without deduction for depreciation (less your deductible). This means your insurance company will pay you for up to the cost to replace your roof at the time of a covered loss, minus your deductible, so you may have a lesser out of pocket expense.

You are not always given a choice between ACV or RCV coverage for your roof; some insurance companies now only offer one or the other or vary their coverage depending on the age of your roof (some even offer the option to buy that coverage back). Additionally, if you do have RCV on your roof, a majority of insurance companies will only pay you the ACV for your roof until you can show them proof that you’ve replaced it. Once they receive that proof, they will then pay you the rest of the money that equals the RCV of the roof (less the deductible).

Regardless of whether you have ACV or RCV coverage, it’s always a good idea to contact your insurance company if you’ve made any updates or improvements to your roof to ensure your roof has the right coverage.

Also, remember that the type of loss can affect what type of coverage is available for your roof. For example, if fire damaged your home, it may be covered at replacement cost while wind or hail damage may be covered at actual cash value. Be sure to read your policy carefully or contact your insurance company to understand your specific coverage.

Roof maintenance tips to protect your home

Because your roof is your home’s primary defense against weather losses, there are a few things you should be doing to keep it in tip-top shape:

  • Twice a year, and after any major storms, check for damage. Be sure to check both inside and outside.
    • When inspecting the interior, watch for things like mold, mildew, water stains and peeling paint. These could indicate a leak.
    • When inspecting the exterior, watch for cracks, rot or rust, or missing, curling or peeling shingles.
    • Don’t hesitate to call a professional if there are areas you can’t see or reach. The cost of hiring a professional to check over your roof for damage will be much less than it costs to repair your roof after it sustains long-term damage.
  • Clean your gutters seasonally. Clogged gutters can easily cause water to back up into your home.
  • Trim overhanging branches yearly (or whenever they become an issue).
  • If you are in a warmer, moist climate, wash your roof occasionally with a pressure washer in order to discourage algae growth.

What if I have a wind/hail deductible on my policy? What does this mean?

Because of the increasing frequency of wind and hailstorms, many insurance companies have begun separating wind/hail deductibles from all-peril deductibles in order to reduce costs and keep policy premiums more affordable for policyholders.

Your insurance deductible is the amount of money that you have agreed to pay in the event of a claim before your insurance coverage begins. When you purchase an insurance policy, you determine how much you are willing to pay out of your own pocket in the event of a loss — your deductible. The higher your deductible, the greater the level of risk you are willing to accept.

However, with a wind/hail deductible, often times instead of paying a flat-amount deductible after a wind or hailstorm, you need to pay a percentage of your home’s dwelling coverage (typically, 1 or 2 percent of a home’s total coverage). This means that someone with a 1 percent wind/hail deductible who has a home insured for $300,000 would have a $3,000 deductible for any windstorm or hail losses.

Does homeowners insurance cover roof replacement?

Let’s say your roof suffers quite a bit of damage during a windstorm and needs to be replaced. How will that be covered under your home insurance policy? First, you’ll need to ask yourself these questions:

  • Have I properly maintained my roof through the years? Homeowners are expected to perform maintenance tasks on a regular basis (like cleaning out gutters, periodically replacing damaged or worn shingles or taking care of rot) to ensure their roof remains in good condition. Some insurance companies do exclude losses that are caused by lack of maintenance.
  • How did the damage occur? Insurance companies pay only for damage from the covered event (like wind or hail). If some of the damage to your roof is because of wear and tear, your claim settlement may not cover the full cost of a roof replacement even though a replacement may be necessary.
  • How old is my roof? The age of your roof is important and companies may use it in rating to a certain extent. This is because your roof has an estimated lifespan based on the types of materials used in its construction.

As always, to ensure you know exactly what your insurance covers, refer to your policy or contact your insurance company directly.

Graphic showing estimated lifespan of various roof types