Roof Insurance in Colorado - What You Need To Know
Roof insurance in Colorado causes almost as much trepidation for our customers as the actual damage to their roof. Hennessey Roofing explains the key things to understand when it comes to insurance and your roof. In this article, readers learn the difference between Actual Cash Value (ACV) and Replacement Cost Value (RCV) and flat-rate deductibles vs percentage deductibles. Our expert roofing team even explains key points about code coverage and compliance and cosmetic waivers. Homeowners who understand their insurance, or work with a roofing contractor who does, save more money on their roofing projects. Keep reading below to learn how your insurance can help with your next roofing project!
Actual Cash Value (ACV) vs Replacement Cost Value (RCV)
ACV vs RCV roofing insurance creates very heated conversations between homeowners and insurance companies. Hennessey Roofing describes the key differences between the two types of replacement coverages below. Many insurance companies decided to switch to ACV recently after Colorado was devastated by hail in recent years. Basically, as insurance claims went up due to major hail and snow recently, several insurance companies were losing profit because their cost for RCV premiums didn't offset the cost of the roofs they had to replace.
Insurance companies describe Actual Cash Value (ACV) coverage by determining what the value of your roof was at the time of the claim. This means that older roofs and roofs with pre-existing damage or cheap materials will be factored into what the insurance company will pay for your roof replacement. They depreciate the value of your roof over time meaning that, oftentimes, ACV coverage will not pay for the total cost of replacing your older roof. ACV coverage tends to be cheaper than RCV coverage because depreciation is attached to ACV and therefore costs the insurance companies less. Homeowners often choose ACV coverage because of the cheaper premiums but many don't realize what they're risking. Something else to consider is that ACV policies are standard on rental properties.
Replacement Cost Value (RCV) provides more comprehensive coverage for roof replacement projects. RCV is essentially the opposite of ACV. RCV coverage means that regardless of the age or condition of your roof, the insurance company will pay to replace it with similar materials after a covered event. Our experts recommend selecting an RCV policy whenever possible despite the properties' condition. It's important to note that the roof is not completely free to the homeowner, however. The homeowner must pay their deductible cost and the insurance company will cover the remainder of the costs.
Flat Rate Deductibles vs Percentage Deductibles? What Are Deductibles?
Home insurance uses a lot of words that people don't see every day. This creates added confusion when purchasing the policy and even further confusion when it's time to make a claim. The experts at Hennessey Roofing deal with insurance companies daily and strive to help homeowners understand their insurance policy and how it relates to their roof. One of the most common questions we hear is, "What are deductibles?" This answer is simple. Deductibles are what homeowners owe out of pocket. They are taken out of the total amount of the claim paid by your insurance. Deductibles should be paid directly to your roofing contractor as part of the total cost of the roofing project.
As part of a bill signed by the Colorado Senate, it is illegal for roofing contractors to cover the cost of your deductible. This means that contractors making these offers, especially after storms, are putting themselves and you at risk of committing insurance fraud in Colorado. Your premiums or monthly payments do not count towards your deductible, unfortunately, which is a common point of confusion when it's time to report a claim.
Another common question we get is, "What's the difference between a Flat Rate Deductible vs a Percentage Deductible?" This question requires a slightly deeper understanding of insurance. Flat rate deductibles show up most often. They are the most simple to understand. Insurance companies usually offer a higher deductible option and a lower deductible option. The higher deductible option is usually cheaper per month in premiums. The lower deductible costs more per month, but less in the event of a claim. Both have their merits depending on the homeowner's budget.
The lesser-known option confuses many more people and is growing in popularity with insurance companies. The Percentage Deductible combines math with insurance and can sound great when they sell you the policy. Put simply, homeowners can determine their deductible in the event of a claim by taking their deductible percentage and multiplying it by the total value of the home/property for which the home/property is insured. This causes a little more confusion so consider the following example. If your home/property is insured for $350,000 and the deductible is 1% of that coverage, you are agreeing to pay a $3,500 deductible. Hennessey Roofing highly recommends that you choose a flat rate deductible, but if you must do a percentage, don't agree to pay more than 1%.
What Is Code Coverage or Code Compliance Insurance?
Code coverage presents an opportunity for homeowners with older roofs. As time passes and new data are available for building departments, they often update building code requirements. This means that your older roofs may not be up to the current building code in your area. If a covered event causes damage to your roof and you have the code coverage insurance option, the insurance company will pay to help you bring your roof up to code and repair the damage to the roof. If a homeowner does not have this code coverage option, the homeowner is responsible for the cost of getting their roof up to code. This would be an additional expense above and beyond your deductible.
What Are Cosmetic Waivers For Roofing Insurance?
Cosmetic waivers for roof insurance in Colorado come up often. They create some of the biggest points of contention between insurance companies and homeowners in Colorado. A cosmetic waiver (a.k.a. cosmetic exclusion or cosmetic endorsement) exists within many homeowners' insurance policies that state that the insurance company will not pay for cosmetic damages to their roof. Homeowners usually take this to mean minor or small repairs. In fact, insurance companies take this to mean anything that is not a structural or functional issue in how the roof performs. This means that ugly hail damage to your roof that doesn't create leaks or structural damage can often be waived by insurance companies. This is particularly frustrating for homeowners that are looking to sell their home or who live in heavily-regulated HOAs.
Roof insurance in Colorado creates many concerns for homeowners of all ages. The policies are often hard to understand and use vocabulary that many people don't see on a regular basis. We believe that our job as your professional and stress free roofing contractor in Colorado Springs is to help you navigate the roofing insurance process to get the most from your insurance companies. Our team regularly communicates with these insurance companies, adjusters, and building engineers to help our customers get the most out of their insurance coverage. Contact us today to learn more about your policy and your options for repairing or replacing your damaged roof.