We've all heard this conventional wisdom: “Get 3 estimates!” Many times, it's really good advice. However, when you have an insurance claim for a roof repair or replacement, and the insurance adjuster or the insurance agent is telling you to get three estimates, is this really the wisest thing to do? I'm here to tell you it's not.
I can already predict what you're thinking.
“Of course you don't want me to get three estimates! You want me to just use Homestead Roofing, and not talk to any other roofers.” OK, I admit it. I do want you to use Homestead Roofing if you need to replace your roof. I mean, I am the owner of Homestead Roofing after all. But hear me out on this one.
Imagine this scenario with me: Let's say you have a medical condition that requires you to have surgery and an extended stay in the hospital. While you're making your arrangements for this interruption in your life, you get a call from your medical insurance provider and the company rep tells you that you need to shop around and get three estimates from different doctors and hospitals. Next, imagine with me what would happen if someone did get three estimates for his surgery and hospital stay. What if estimate #1 was $53,000, estimate #2 was $17,500, and estimate #3 was $122,000. Which one would you be most likely to accept? If you thought to yourself that there must be a huge difference in what each doctor is going to be doing to create such a large price variance, you're on the right track! But, unless you're a doctor or a medical professional yourself, how would you know which procedure is the right one for you? Chances are you wouldn't.
The problem is that we're almost all conditioned to think that cheapest is always the right choice. In truth, if everything about the service or product is equal, cheapest may be the right choice, but if there are price differences, it's highly probable that the service or product IS NOT equal.
In the July, 2017 issue of our newsletter, I explained the difference between a Replacement Cost Value (RCV) policy and an Actual Cash Value (ACV) policy. That distinction is important for this discussion, too. If you have an ACV policy, then you will only get one check – the claim amount, minus your deductible, and minus the depreciation amount. What is left is what your insurance company is giving you to get your repairs done. In this situation, it certainly IS a good idea to get three estimates. Just make sure that you understand what is included in, and excluded from each contractor's estimate so you can make sure you're comparing apples to apples.
If you have an RCV policy, however, you will get your first check, which is the claim amount, minus the deductible, and minus the depreciation. When the job is complete, and your contractor has submitted his final invoice to your insurance company, you will get a second check for the depreciation amount. If you have an RCV policy, like most insurance clients do, then your insurance company is paying for the entire cost of the roof replacement, except your deductible. That means that your deductible is your only out-of-pocket expense.
This Is The Critical Piece Of Information!
So just like in the medical example above, if you have an RCV policy on your roof, that means that your insurance company will pay for the whole project, minus your deductible. With your medical need, your out-of-pocket expense will be just your deductible – regardless of the cost of the surgery and hospital stay. Similarly, if you have an RCV policy for your roof, your out-of-pocket expense will also be just your deductible. Since your out-of-pocket costs for your roof replacement will stay the same no matter what the cost of the re-roof is, getting three estimates may actually add more confusion and complexity to the project, and it could end up motivating a homeowner to make a bad choice of which roofing contractor to hire. It is critical, therefore, to interview a few different roofers to determine which one you feel most comfortable with, which one stands behind their work with an exceptional warranty, and to find the one who is the most adept at working with your insurance company's claim department, but it is not important to have each of those roofers give you an estimate. This is especially important if the three estimates you receive have a big difference in the prices. DO NOT hire a roofer who just says, “I'll do this job for whatever the insurance company pays.” That's an indication that the roofer either doesn't understand the insurance process or doesn't want to make sure that all items needed to be replaced are actually included in the insurance claim. Here are a couple of examples:
- One homeowner contacted us and had an insurance claim that was paying for a repair to her roof. The claim amount was about $2,000. We worked with her insurance company and, through our discussions with them, they agreed that the roof really needed to be replaced rather than repaired. Had this homeowner sought three estimates for a roof repair, she would have ended up with a roof that actually needed replacement.
- One homeowner had an insurance claim for a roof replacement in the amount of about $16,000. We researched the actual replacement needs, found that the replacement cost would be about $27,000, and then worked with the insurance company to increase the claim amount. Had this homeowner hired a roofer who had the lowest estimate, or hired one who would have done the work for what the insurance claim amount was, he would have ended up with a roof of lesser quality and poorer performance.
If you have a need for a roof repair or replacement due to an insurance claim, or you know someone who does, remember that getting multiple estimates is probably pretty meaningless and could cause you to make the wrong choice on which roofing contractor you hire.
