If you have a mortgage on your home, you are required to carry homeowners' insurance. But the type of roof you have, and its condition, can radically affect the price of your premium. In fact, you might be denied coverage altogether if your roof doesn’t meet the insurance company’s requirements.
You don’t want to wait until you need to file a claim to discover your insurance isn’t what you thought it was. You could even avoid claims entirely by choosing a roofing material for its longevity and weather resistance.
Policy Coverage: ACV vs. RCV
Unfortunately, many homeowners aren’t clear about what their property insurance covers and doesn’t cover. One common area of confusion is actual cash value versus replacement cost value policies.
What Is ACV and RCV?
Actual cash value (ACV) policies pay out the roof's value at the time of a claim. That means that if the roof has depreciated in value, you may only get a small fraction of what you originally paid for the roof. If you have to replace the entire roof after a major storm, that difference can be significant.
Replacement cost value (RCV), on the other hand, pays for roughly the full cost of replacing your roof after a disaster. That means you’re not on the hook for thousands of dollars if you have to file a claim.
The older your roof is, the more it depreciates, especially after it reaches 10 years in age. Some policies automatically convert from replacement value to actual cash value payouts around age 15. This is sometimes referred to as the “15-year cliff” within the insurance industry.
The type of roofing material also plays a role in how policies are written. While all roofing eventually depreciates, some types of roofing lose value faster because they’re less durable. Asphalt shingles are a prime example. They’re nearly always subject to a 15-year change from RCV to ACV.
Metal Roofing Avoids “the Cliff”
Metal roofing, however, is much more durable and lasts for 40-70 years, especially stone-coated metal roofing. So insurance carriers usually maintain policies at RCV status for 25 or 30 years. When the roof does finally start to depreciate, owners still often get back about 70% of the roof’s replacement cost with a claim.
Compare that to asphalt shingles, which “falls off the cliff” at 10 years to only reimburse owners about 10% of the replacement cost. Clay tile and wood shake roofs fall somewhere in between metal and asphalt.
It’s Not Just About Claims
Maintaining the long-term replacement cost value of your roof isn’t just a boon if you have to file a claim for damage. It can affect your ability to get or refinance a mortgage that requires adequate property insurance. Similarly, it can influence a buyer’s decision to purchase your home if you decide to list it. Recent changes by the current White House administration have loosened some restrictions, but you or your buyer may still be limited to certain mortgage programs.
This is particularly true if you live in Florida, Texas, Colorado, or California. These states have had a serious uptick in severe weather-related claims. Insurance companies have successfully advocated for stricter rules about ACV policies or pulled out of the market altogether.
Know Your Policy Inside and Out
How do you, as a homeowner, protect yourself in this environment? Read your policy carefully and completely. Make sure you understand all the fine print and talk to your agent about any questions before committing to the policy. Don’t wait until you have to file a claim to discover your coverage is much less than you thought.
“Homeowners should understand how a roofing material will impact a potential claim settlement. Many people have depreciated roof coverage and don’t even know it. The distinction is critical because the claim payout for asphalt roofs is often a fraction of that for a metal roof of the same age. The unfortunate fact is most homeowners are not informed about their policy coverage until they have a claim, at which point it is too late to prevent what could be a very costly mistake,” said Ian Gutterman, insurance educator and CEO of Informed Insurance.
Old and Dangerous Roofs: Trigger for Non-Renewals
What could be worse than having a claim payout far less than you expected? Being dropped by your insurance company.
Discontinued Coverage for High-Risk Roofs
It’s been all over the news lately, and you may know someone whose policy wasn't renewed because of a subpar and/or aging roof. Insurance companies don’t want to cover properties with old, worn, or faulty roofs that are likely to be involved in a claim.
How do they know which roofs are vulnerable? In addition to inspections conducted for mortgages and property sales, aerial inspections are giving carriers the information they need. Homeowners may not even realize their roof has been inspected by a drone until their policy is discontinued.
Roofing Material Matters
When weighing the pros and cons of different roof types, property expert Michael Ryan points out that “not all roofing materials are created equal when it comes to insurance. Asphalt is much more susceptible to damage from storms, hail, hurricanes and tornados. This means that homeowners with asphalt roofs will likely pay more for their insurance than those with other types of roofs.”
In states with extreme weather and fire concerns, some roofing types are triggering blanket coverage denials and non-renewals. For instance, in California, where wildfires are a state-wide concern nearly all year now, combustible wood shake roofing won’t get covered. In fact, in some areas, it’s completely banned by building codes. A smart move is to look for naturally noncombustible metal roofing that has earned the highest fire rating from Underwriters Laboratories (UL).
In Florida, an epicenter for Atlantic tropical storms and hurricanes, asphalt roofs—especially older ones—are under scrutiny. In high winds, asphalt shingles can peel right off the roof, leaving the home exposed to the elements. Homeowners there who want insurance coverage are installing metal roofing that meets stiff Miami-Dade standards and won’t suffer roof uplift even in 120-mile-per-hour winds.
Discounts for More Durable Roofing
If all of the above seems gloomy, there’s good news for homeowners. Those that choose metal roofing, which is favored by insurance carriers, often enjoy discounts on their premiums.
Take Advantage of Metal Roofing’s Long-Term Savings
It’s the flip side of insurance carriers not wanting to cover high-risk properties. They’re happy to reward property owners who make good choices with roofing and go with metal roofing that is:
- Longer lasting than other roofing types by 2-3 times
- More weather-resistant against hail, wind, and rain
- Resistant to wildfires, which are now a nationwide threat
Even though the American West has typically been thought of as “fire country,” fires are a problem everywhere. In April, because of drought conditions and unusually high spring temperatures, flames are raging in Georgia and South Carolina—places that are considered at risk for hurricanes, not fires.
Hail is another growing worry, especially in the Plains’ “Tornado Alley” and the Upper Midwest. Hailstorms often go hand in hand with tornados and large wind events in this part of the country, although they can occur anywhere.
Large hail incidents are on the rise and predicted to get worse. And with the average cost of roof claims for hail damage being $12,000, this is crucial for homeowners to understand. Even if your insurance company pays out on your claim, you still have to pay your deductible, which for most folks is $1,000.
A better solution is to avoid hail damage altogether with a hail-resistant metal roof. Look for one with a Class 4 Impact Resistance rating from UL. And the best roofing manufacturers exceed that with warranties against hail as large as 2.5 inches in diameter.
DECRA Metal Roofing Is a Winner with Insurance Companies
Want a roof that your insurance company will love? Choose DECRA stone-coated metal roofing for your next roof remodel.
In addition to being durable and weather resistant, it’s energy efficient and can increase the value of your home. DECRA is available in a range of colors and in profiles that mimic traditional shingles, tiles, and shake, so you’re assured a beautiful roof that matches the style of your property.
See DECRA up close and understand why it's a favorite with insurance companies. Request a complimentary sample today.
