Storm & Hail Damage Insurance Claims
Where Do I Start?
If you think your home or business was damaged in a recent storm, the first step is to get a free inspection done by a reputable local contractor. The reason for this is that you don’t want to have an insurance adjuster come out if you don’t have damage. Some insurance companies will penalize you for filing a claim and this could negatively affect your policy status.
If the contractor finds no damage or only minor damage, then there is no need to contact your insurance company at all. If the contractor tells you that, in their professional opinion, you have enough damage to file a claim, then you will want to file a claim and have your insurance company send out an adjuster. You have the right to have your contractor present at that appointment in order to represent your interests and make sure that all applicable damage is covered.
How Does the Process Work?
If there was enough damage found by your contractor and a claim is filed, the insurance company adjuster will come out and do a thorough inspection. It’s a good idea to have your own contractor present during this inspection. Remember that the insurance company adjuster is there to protect the insurance company’s interests, not yours.
In most cases, about a week after the adjuster inspection, you will receive a list of damages the insurance company has agreed to pay for, along with your first check. This is the ACV (Actual Cost Value) check. This represents the fair market value of your roof today. Much like a car, a 10-year-old roof is worth less than a new roof, and the difference between those two amounts is called depreciation. So, the ACV is the cost to repair or replace the damaged property, minus depreciation.
The ACV plus the depreciation (which you will be paid later AFTER the work is done), equals the RCV (Replacement Cost Value). Most storm damage contractors will agree to perform the work for the RCV amount paid by insurance, whatever that amount may be. So, your only out of pocket expense will be your deductible.
So, for example, let’s say you have a 10-year-old roof, and the actual cash value of that roof is $8,000. Let’s also assume it will cost $15,000 to get your roof replaced with a new roof of like kind and quality (that would be the replacement cost value or RCV). The $7,000 difference represents the depreciation. The age and condition of the property are considered when calculating this depreciation. The older the roof, the higher the depreciation amount.
The insurance company will write you a check right away for $8,000 (ACV). If you do choose to have your roof replaced, then once the work is complete, your contractor will submit a certificate of completion to the insurance company for the work that was done. At that point, your insurance company will release your depreciation payment. Once received, you will either sign that check over to the contractor or deposit it into your account and issue a personal check to the contractor for the remaining balance of the work.
Keep in mind that when the work is completed, the insurance company will issue a check for the recoverable depreciation (there may also be non-recoverable depreciation in some cases, but that is beyond the scope of this article- please ask your project manager to explain) only if the total expenses are equal to, or greater than the total settlement. Many people never get the final depreciation payment because they do not understand the process or the contractor they chose didn’t understand the proper procedures. When this happens, you can lose thousands of dollars.
Do I Need Multiple Estimates?
If it’s an insurance claim, then there really is no point to getting estimates and you are not required to do so. Your insurance company has created their own price list and will only pay for the cost of repairs at the lesser of their fixed price list or the price you are charged by your contractor. So, if your insurance scope says they will pay $15,000 for your repairs and your contractor provides them with a final bill for 13,000, then they are only going to pay $13,000 (minus your deductible). Your contractor will have to submit a final bill to the insurance company to get the rest of your money (the deprecation) released, so there is no way to profit from your insurance claim without committing insurance fraud.
Most storm damage restoration companies will do your repairs for the amount the insurance company is paying. Your only out of pocket expense will be your deductible. Getting lowball estimates for your insurance company only saves them money and may provide you with an inferior product. You are legally entitled to use whatever contractor you choose and are not required to gather estimates.
Remember that all you are going to pay out of pocket is your deductible. That means for $1,000 (or whatever your deductible amount is) you can get a top-quality first-rate product from a highly reputable contractor or you can go with the lowest bidder and take your chances.
So, by all means, feel free to interview several companies so you can find someone that you are confident will do a great job, use quality materials, and will be around for the warranty period. But when you get multiple estimates or use price as the determining factor, all you are doing is saving your insurance company money and possibly cheating yourself out of the quality job you deserve.
What If the Insurance Payment Isn’t Enough?
This is where insurance supplementing comes in, and where it pays to have a contractor that is intimately familiar with Colorado insurance laws and procedures. It is common for an insurance adjuster to leave off items that are required by local code like ice and water shield or drip edge. In other cases, additional damages (like rotted decking) may not be discovered until after work begins. In still other cases, the amount provided by insurance is not enough to buy the window and have it properly installed. In all these cases, we work directly with your insurance company to get additional funds (supplements) released so that your home can be fully restored to pre-storm condition.
If the insurance company agrees to a supplement, they will issue you a new scope which includes these increased amounts. These supplement amounts will become due and payable to your contractor once you have received them. Remember that additional supplements approved by your insurance company do not increase your out-of-pocket costs whatsoever, and you should never be billed for supplements that are not approved by your insurance company.
Remember that supplements are additional money that the insurance company has agreed to pay your contractor for work performed. This is not money that you are entitled to keep, as it raises the same insurance fraud issues discussed as covering, waiving or rebating your deductible.
At CSR, we are insurance claims experts. We even have former adjusters on staff. We will work with you through the entire process to make sure you get all the damage covered and you are paid out all amounts you are entitled to. We can handle all the red tape and obtain permits, etc.
Can You “Cover” My Deductible?
In Colorado, it is insurance fraud (both on your part and on the part of your contractor) for a contractor to pay, waive, or rebate any portion of the insurance deductible or for you to keep any amounts that the contractor has billed the insurance company for.
In addition to the prospect of getting into legal trouble (and insurance companies are cracking down on this type of activity) you have to understand that a company that is willing to commit insurance fraud, and induce you to do the same, is very likely to make up the amount they credited you by taking other shortcuts like using inferior products on your roof. Many of these companies are also from out of state and aren’t going to be around to perform any type of warranty work on that inferior job either. We’ve seen this many times and have even been featured on Fox 31 News to warn consumers about this issue.
Using the Insurance Company’s Roofer
You’re legally entitled to use whatever contractor you want. We’ve been invited to be a part of these “referral networks” by many insurance companies. However, in most cases in order to do so, you must agree to do things the way the insurance company wants you to do them, which is often not what’s in the best interests of the homeowner. The insurance company’s “preferred contractors” will often have incentives to keep costs low, which means they aren’t doing all they can to get you the best roof possible.
Remember that all you are going to pay out of pocket is your deductible regardless of whom you hire. That means for $1,000 (or whatever your deductible amount is) you can get a top-quality first-rate product from a highly reputable contractor or you can go with the lowest bidder and take your chances.
So by all means, feel free to interview several companies so you can find someone that you’re confident will do a great job, use quality materials, and will be around for the warranty period. But when you get multiple estimates or use price as the determining factor, all you are doing is saving your insurance company money and possibly cheating yourself out of the quality job you deserve.
The biggest thing you must remember here is that even if you find someone to do the work for cheaper, you aren’t going to be able to keep that extra money. The insurance company is only going to pay the lesser of the amount of their estimate or the cost you incur. There are legal ways that we can help you limit your out of pocket costs and we would be happy to work with you on that.