Hail season is about to descend on Central and South Texas – every year there are storms that cause millions of dollars in damage to Texan homes. There are things that you should do before the storm comes to ensure that you are protected and ready, and they all have to do with your insurance policy. Homeowners need to know what type of policy they have, how much their deductible is, if they have code coverage upgrade, whether the policy waives cosmetic damage, and understanding what your policy does (and does not) cover.

What type of policy do I have? RCV versus ACV

There are two basic types of policy – Replacement Cost Value (RCV) and Actual Cash Value (ACV), and you want to make sure you have an RCV policy. While the premium on an ACV policy is likely less, which makes it tempting, the coverage can be almost non-existent, especially on older roofs. With and RCV policy, the insurance pays to replace that roof at current market value, less your deductible, of course. This is usually done through two payments – they will pay you the cash value of your damages (less your deductible), and when the work is completed, your depreciation. Depreciation is the portion of your roof that has already been used. On an ACV policy, your insurance company only pays you the cash value of your roof less your deductible – the depreciation is forfeited!

Here are two examples of a roof that has a 30-year shingle and is 20 years old.

	RCV*	ACV*
RCV Amount	$   15,000.00	$   15,000.00
ACV Amount less deductible	$     3,000.00	$     3,000.00
Depreciation received	$   10,000.00	$                  -
Deductible amount	$     2,000.00	$     2,000.00
Total amount paid by insurance	$  13,000.00	$     3,000.00
Total out of pocket cost	$     2,000.00	$  12,000.00

How much is my deductible?

You should be able to check your policy to see what your deductible is. If you cannot find it, contact your agent. Most policies are 1% of your home value, but some policies are 2% - 5% of your home value – you for sure want to know! Again, sometimes people pick a higher deductible to lower their premium, but when need to use it, it can be shocking how little coverage you have. In the scenario above, if you had a 3% deductible it would be $7,200 – our average roof is $12,500, so that would mean your insurance company would only be covering $5,300 of your roof – not even half!

Another thing to look for is if your deductible is based on your home value, make sure that your home is value correctly in your policy.  Even in a ridiculous example like your insurance added and extra zero to your home value by accident and shows its value at $2.4M. If your deductible is 1%, this equals $24,000. This means you would have no coverage for a $12,500 roof. It is more common for the home value to be off by a smaller amount like $30,000, but that still changes your out-of-pocket expense by $300. Even if the value is wrong and is an error, the policy amount will stand. The policy will be corrected after the fact, but it will not change your claim.

If a contracting company offers to pay your deductible, buyer beware! On September 1, 2019, HB (House Bill) 2102 was signed into law, which makes it illegal for a contractor to waive deductibles, and also illegal for a consumer to participate in any such transaction.

Code Upgrade Coverage

Sometimes an older roof does not meet code requirements, and it has been “grandfathered” in. When you install a new roof all applicable building codes must be followed. Most insurance policies cover code upgrades, but some do not. This mostly affects the drip edge (the strip of metal around the perimeter of your roof that keeps your fascia/trim from rotting out). This was coded in 2008, but not really followed until 2016. Many homes, especially prior to 2016, do not have drip edge. If your policy does not cover code upgrades, you may have to pay out of pocket to meet code. One municipality code I know of requires all roofs to have 5/8” decking (aka sheathing). If you are required to redeck your entire house out of pocket, it could cost you thousands of dollars. Check that your policy includes it.

Cosmetic Damage

Especially if you have a metal roof, you need to know if hail damage is considered cosmetic (unless it breaks the metal). Insurance companies give discounts off your premium for what they call a Class IV roof (impact resistant) – generally Class IV roofs are standing seam metal, but there are Class IV shingles as well. When you claim a Class IV roof, you are g basically signing a waiver that you agree your policy does not cover cosmetic damage. After a hail event, it may look like your roof has a case of the chicken pox, but it will not be covered. If it is damaged/broken, insurance would cover it, but it would not cover “pock marks.”

I generally do not recommend impact resistant shingles to my customers, and I caution anyone with any type of roof claiming that Class IV discount. If you do, just make sure you are clear on what they will and will not cover, and make sure that you can live with it.

Does my insurance cover all damages?

The quick answer is no, your insurance does not cover all damages. Some homeowners believe that just because it is time to replace their roof, their insurance will cover it, and that simply is not true. Insurance is meant to cover unforeseen, uncontrollable events – generally referred to as “Acts of God.” Whether or not you believe in God doesn’t change your coverage!

Insurance generally covers:

• Hail
• Wind, including wind driven rain (it gets blown in)
• Falling objects
• Hurricanes/Tornados

Your insurance does not cover:

• Normal wear and tear (age)
• Workmanship issues (poor installation)
• Rodent damage
• Homeowner negligence (a roof that has been leaking for 3 years and has rotted the decking and framing)

Things your policy likely does not cover (check):

• Flooding (generally this is a separate policy)
• Sewer backups
• Earthquakes
• Water leaks/broken pipes
• Acts of war

To read more on what your homeowner’s insurance policy may or may not cover, you can visit What Is and Isn’t Covered by Homeowners Insurance (investopedia.com).

Summary

Once the storm strikes, you cannot alter your insurance coverage, so it is very important that you ensure that you are properly protected. I know that insurance documents can seem boring and tedious, but it is well worth your time to investigate. Your insurance agent should easily be able to answer all these questions!

About the Author:

Ami Feller was born and raised in Marshalltown, Iowa. She graduated from Iowa State University in 1997 with a BS and a BA. While attending ISU, her brother started a roofing crew during the summers, and Ami went to work on the crew. She felt something lacking in corporate America after graduation, and returned to the roofing industry in 2012. In 2016, Ami split off on her own and opened Feller Roofing of New Braunfels. She is known around town and on YouTube as “The Roofer Chick.” Recently Ami started an entirely female roofing crew; she is actively working to change the stigma of women in the trades.