The Insurance Deductible & Roof Bids
Let’s talk about the insurance deductible, roof bids, and how they relate to the insurance claims process after a disaster.
We’re going to break this into a few parts because this can get a little complicated, so bear with us. However, there is a lot of misinformation about the process. We felt it was important to clear the air about everything for the benefit and safety of homeowners, as well as, roofers. Hopefully we can clear up the confusion and help set better expectations for both parties before business starts.
Okay, so you had an incident and you’re looking to get back to enjoying normal life ASAP.
The most common concern most homeowners have is, how to get the best bang for their buck during a claim. We’re here to tell you that the best thing you can do is find a contractor you trust, and don’t go for the cheapest one. In an insurance claim, there is no ‘’best price’’. This is because home restoration claims differ greatly to auto claims.
Xactimate is a 3rd party estimation software. Most insurance companies use it to calculate material and labor costs for repairs. In fact, it’s the same software the majority of roofing companies use! The software contains pricing standards for the industry, specific to your zip code.
When your insurance adjuster comes out, he/she will itemize everything they determine damaged and then take it back for analysis. Once reviewed, they will send you an offer for what they believe they owe. It is then up to your roofer to triple check everything to make sure they didn’t miss anything. Your roofer should begin negotiations with the insurance company if an item is missing. The cost of each item for the most part, cannot change. It's only a matter of if the insurance company will agree that you are, in fact, owed those particular items.
The insurance company will then release the first check, or ‘’ACV amount’’ (Actual Cash Value) to you. If your contractor is doing work for less than what they invoiced the insurance company for, there is now a case for insurance fraud. Yikes! Totally not worth it to save a few bucks! The penalties for defrauding an insurance company can include jail time, and hefty fines. Likewise, think practically about what it means to work with someone who knows the industry and is willing to commit insurance fraud.
The standards in Xactimate are there for a reason. Material and labor cost money. If they are performing services for less, you are getting one of two disadvantages.
1.) You are not restoring your home to the industry standard.
2.) The company which provides the services will likely not be around in the next five years in the event you have a complaint. Companies who shave their overhead and profit have an extremely tough time staying afloat. Think about all the costs and risks associated with running a business. When the unexpected occurs (and it will), companies have to be ready or it could mean a quickly sinking ship. Operation costs, liability, and workers compensation will never be free. A restoration company looking to establish themselves long-term, must account for them.
The Insurance Deductible
How do I get my deductible ‘’waived’’?
The short answer is, you can't unfortunately. We’re aware of this in the industry and understand that you may think it’s a safe practice but bear with us once again so we can explain the risks. Then we’ll show you a way to ACTUALLY save money during a claim. There is light at the end of the tunnel, we promise!
Your deductible is a legal agreement between you and your insurance company. You pay a fixed cost insurance deductible for your claim. It doesn’t matter if your deductible is $1 or $5000, you owe your insurance company this. When roofers ‘’waive’’ or ‘’eat’’ the deductible, they are cutting their overhead and profit margins down. When we talked about the long-term viability of companies, this is directly related.
Roofers who regularly eat insurance deductibles are far more likely to go under. It means they don’t understand the ramifications of doing so, and will have issues in the future. None of this is good for you, the homeowner. How can you get warranty work if the company isn't in business anymore?
Additionally, manufactures are very particular about covering warranty work in the event this occurs. They want at least three of their products used in combination to make up your roof system. Only then, will they consider honoring registered warranties. If a contractor is cutting corners before they begin the work, how likely do you think it they will use the same manufacture for supplies? It's not a great start.
So how can you save money during a claim?
Let’s say you don’t have the money to go out of pocket to cover your insurance deductible. Totally understandable! In fact, a pretty substantial portion of homeowners are in this exact boat. You’re not alone!
Remember when we spoke about the itemized list covered by the insurance company? Your insurance company owes damaged, covered items to you. However, you could choose not to install some of those line items. You might decide to do some of the work yourself, or even save it for later.
This means that you could keep some of the money the insurance company gives you, and pay less out of pocket. In this case, you could apply some of those extra funds to your deductible. The caveat to this is that if an incident occurs again later, your insurance company will not pay out on those line items which you chose not to repair.
Is it worth it? That is the conversation you will want to have with your trusted roofer and why it’s important to select a good one to begin with. Check out portfolios or go with a referral from someone you know very well.
So now we’ve come full circle. Pick a contractor that is going to give you good value through the entire process. For most of us, our home is the biggest investment we will ever make. Take care of it and sleep easy knowing you had good work done, legally. We really hope this helps guys, thank you for reading!