With everything that goes into replacing a roof, the process can be incredibly stressful. On top of worrying about the damage to your home, you’re now thrown into situations where you need to understand insurance claims, depreciation amounts, and finding a contractor that you can trust.
It can be a lot to handle and, without the right resources and help, can lead to a long, arduous process with poor results. It’s important to go into the roof replacement process with as much knowledge as possible, especially these 3 tips that you need to know.
1. Should I Sign Over my Insurance Check to My Roofer?
If you have a roofing contractor asking you to sign over your insurance check, you may think that this is a big red flag. However, in reality, there are many different variables that can affect how you want to proceed with this kind of situation.
When Can You Sign a Check Over to the Contractor?
Replacement Cost Value Coverage (RCV)
When you have RCV coverage on your property claim, you will usually receive two checks. The first check is sent at the start of the claim, and the second check or the "depreciation amount check" will come when the repairs are complete, and the insurance company receives all the invoices done on your roof.
- First Check: According to Colorado Senate Bill 38, a roofing contractor should not be collecting deposit money upfront from a homeowner before materials are delivered to the property. Therefore, if materials have already been delivered to your property and if the amount that the contractor is requesting you pay him, i.e., the insurance check is not more than 50% of the total project amount, then it is fine to assign that check to the roofing contractor.
- Second Check: If the contractor has finished their work, and the second check does not exceed the amount you owe to your contractor, then there is no risk to the homeowner assigning that check to them.
Actual Cash Value Coverage (ACV)
If you have actual cash value coverage (ACV) on your insurance claim, you are usually only getting one check. And that check will typically not be enough to cover all the work that the contractor will do for you. You will most likely have to come up with the extra funds to pay for the project. In this situation, there would be no issue in assigning that insurance check over to your contractor.
When Should you NOT Sign a Check Over to the Contractor
Replacement Cost Value Coverage (RCV)
- No Materials: It will be a bad idea to sign an insurance check over to the contractor if no materials have been delivered. If you assign this check and the contractors do not want to do the work, there is no recourse for you to pursue because the insurance company will not send you another check. The better option is that you pay with a personal check because you will have ways to cancel the amount if things go awry.
- Check Amount is More than 50%: If the insurance check amount is more than 50% of the total project amount, it may indicate that your insurance claim is for more than just the roof, and your insurance company has sent you money to complete other work at your house. Therefore, if the check exceeds the amount of the total job done, do not sign it over.
2. Do Not Hire an Uninsured Roofer
Before hiring a roofing contractor, it is essential to find out if they are fully insured. Do your research, even if they claim they are protected, as the consequences can be extremely detrimental to you if they are not.
What Does 'Fully Insured' Mean?
Fully insured means that the contractor has enough insurance, and the right kind of insurance, to protect you if anything happens on your property. Fully insured means they have both general liability insurance and worker's compensation insurance.
- General Liability Insurance protects you against damage to your property and restores you to your pre-damage condition.
- Workers Compensation Insurance is the insurance that employers have to protect their employees who are injured on the job. If the roofing company you hired does not have this insurance, and a worker is hurt while doing work on your property, the personal injury lawyers can go after you for the damages that ensued, resulting in catastrophic expenses.
How to Make Sure the Contractors are Fully Insured
When you hire a contractor, do not just ask for proof of their insurance, as it can be counterfeited. Instead, have the contractor's agent email or mail you a copy of their insurance certificate. Then you can see if the policy is enforced, or you can even call the agent to verify that it is a valid certificate. Taking these steps will make sure that you and your property are protected.
What Kind of Insurance Should Your Contractor Have?
3. Wondering Why Your Insurance Check so Low? Learn How It All Works
There are a variety of reasons why your insurance check is low; however, this issue mainly arises because there is a misunderstanding with how the insurance company works and the type of coverage you have.
Replacement Cash Value (RCV)
After you experience roof damage, your adjuster will need to do two things:
- Estimate how much it will be to replace your roof and fix the damages, and
- Depreciate the materials that are currently on your roof by assigning a depreciation amount based on your last re-roof.
That is why the check is often small because the deductible and depreciation are taken out of it. However, if you have RCV coverage, you will receive that depreciation amount at the end of the job through a second check. If you do not have this coverage, you will not recoup these costs.
Roofing is a complicated process, and taking on all the insurance issues alongside the repairs can leave you feeling even more confused. If you have any questions about the roofing or insurance procedures or anything involving replacing a roof, contact us today to speak with a member of our team.