Insurance and Your Roof: What to Know When Buying a PolicyPosted on February 15th, 2023 in Roof Insurance
When Texans say ‘go big, or go home’ we certainly mean it, for everything. From the size of our state to the extremes in our weather, everything in Texas is on the larger, more intense side. Most of the time, that’s something to be proud of. But as homeowners, the extreme weathers and intense temperatures are not something we like to brag about. Here at Jenkins Roofing and Construction, we regularly get calls from clients asking us what the best home insurance policy is for their houses. The great news is, there are lots of options out there. But with so many choices, many people get confused about where to start and what policies suit them. There are multiple things you should be looking out for when searching for a great home insurance policy and agent relationship.
Roughly 90% of Texas homeowners only use their homeowners’ insurance for storm damage reasons related to hail. Most of us in the area have to file a claim at least once per decade if not more. And with the recent freezes gracing our homes for the past three years, there has been an uptick in insurance claims. It is always the best choice to talk to a licensed insurance agent to know which policy suits you the best, but with our years of experience dealing with these problems, Jenkins would love to help you get the ball rolling with some basic tips on buying and claiming insurance policies that will keep your wallet as fat as possible without having to make your life too difficult when the next hailstorm comes along.
How are home insurance rates determined?
Each insurance company has different underwriting rules which results in fluctuating rates. However, these are some basic parameters of how a company decides on what to charge you for your premium:
- Your home’s age and condition. Companies can’t turn you down just because of your home’s age or value, but they can charge you more depending on older homes or more damaged homes that will need repairs more frequently.
- Your home’s replacement cost. Houses with higher replacement costs have higher premiums.
- Your out-of-pocket deductible. The more money you pay upfront, the lower you’ll have to pay monthly premiums.
- Construction materials. Premiums are higher for houses built completely of wood. They’re lower for houses built of brick or stone. It all comes down to durability and a wooden house will not be able to endure as much damage as a brick house will.
- Which area do you live in? Premiums are higher in areas that have more storms or crime. In a place like Texas, you can expect to pay just a little extra for the lovely winter storms we’ve been having.
- Availability of fire protection. Premiums are lower for houses that are close to fire stations.
- Your claims history. Your premiums might be higher if you’ve had claims in the past.
- Your credit score. Some companies use your credit score to decide what to charge you.
What to think about when considering insurance coverage on your home:
Deductibles and how to choose the best fit:
- A deductible is the amount of an insurance claim that you must pay yourself. An example of this would be if you filed a claim to repair your roof for $20,000 and your deductible was $3,000, you would only pay $3,000 out of pocket while the company took care of the remaining $17,000. You might have different deductibles for different types of coverage, such as wind/hail vs. fire/water vs. theft for example.
- Most deductibles are determined as a percentage of what you have the home insured for.
- We all want to pay as little out of pocket as possible. But there is no such thing as a free roof or no-deductible payment according to Texas law. As a matter of fact, there is a campaign to educate the public about roofers who offer this and how it scams clients out of benefits and is supported by industry associations such as NTRCA.
- Try to find a 1% wind/hail deductible. We have seen many horror stories of how folks sometimes try to save some money and go with a 2% or even 3% deductible, only to find that when it came time to get the roof replaced, the policy barely paid for anything. Be smart. We’re not saying to always go with a 1% deductible because every situation is tricky to find the right plan because of the recent spike in the costs of construction. Homeowners today are facing not only higher premiums but also higher deductibles as their homes are insured for hundreds of thousands of dollars more than they would’ve been just a few years ago. different, but at Jenkins, we’ve seen it to be a number that most customers feel is workable and affordable when it comes time to replace the roof.
Replacement Cost coverage vs. Actual Cash Value coverage – why does it matter?
When selecting a policy, you can choose to opt for Replacement Cost coverage of your home or Actual Cash Value coverage. Replacement cost coverage pays to repair your property for current prices. For example, say you bought a new roof 10 years ago and the current price for a new roof is $10,000. If you have to replace your entire roof after a storm, a replacement cost policy would pay for a new roof at today’s prices. If you have a $2,000 deductible, your company would pay $8,000. Actual cash value coverage pays replacement cost minus depreciation, which is a decrease in the value of your house due to wear and age. In the example above of the 10-year-old roof, the actual cash value might be $7,000. After your $2,000 deductible, your company would pay $5,000. You’d have to pay the rest of the cost of the new roof yourself. This means your total out-of-pocket costs for an actual cash value policy would be $5,000, compared with $2,000 for a replacement cost policy. So, it is beneficial most times to choose policies that offer Replacement Cost coverages to save yourself the extra thousands from coming out of your pocket.
Age of Roof Coverage changes: Could the policy change over to actual cash value (ACV) after the roof is a certain age?
Jenkins Roofing and Construction is seeing several insurance companies in Texas set up their policies to automatically switch coverage after your roof is 10 or 15 years old to actual cash value instead of replacement cost, which is NOT GOOD. We have no crystal ball to know when your roof might be damaged, and it could cost you thousands of dollars if your policy only covers actual cash value.
Discounts: What discounts might I get?
- 20-30% for a new roof (0-5 Years old)
- 23-35% for a Class 4 Roof (As long as it is up there)
- Alarm monitoring discount
- Fire alarm
- Burglar alarm
- Sprinkler system
- Claims free discount
- Home/Auto/Life Discounts for multi-lines of business
How helpful is my agent? Questions to ask when connecting with an insurance agent
- Can I easily visit my agent and/or speak with them if need be?
- Do they know who I am and can I trust that they have my back?
- Will my agent work as a partner with me if I have an issue with a claims adjuster?
- Are they too busy and only see me as another client rather than a homeowner?
- Can they explain difficult policy terms to me without jargon?
- Are they willing to advocate for me when I file claims and be on my side?
How dependable is my insurance company?
- This may be the one instance where bigger isn’t always better. Of course, you want the money and resources that the large companies have to offer. However, they also have lots of clients and won’t necessarily be interested in maintaining a close partnership with you. With smaller companies, you get client-to-agent relationships that are deeper and they can be more trustworthy. But, to play devil’s advocate, we’ve seen that tiny companies can be difficult to work with when it comes to getting the job done in terms of servicing and getting appropriately paid after storms.
- Need a referral? Give us a call and we can point you in the right direction to a great local agent that will take good care of you and sell you a fairly-priced policy with excellent coverage.
At Jenkins Roofing and Construction, we’ve had years of experience dealing with insurance agents, deductibles and companies. It is always helpful to talk to a qualified roofing company such as Jenkins Roofing and Construction and an insurance agent when reviewing home insurance policies. You can also visit TDI for updated information to be better informed before you commit to a new policy.