Did you know one of the most important things to consider when buying a home is the age and lifetime value of the roof? If you don't know, you could be in for a rude awakening if you need to replace it. And finding out can sometimes delay the buying process.
Let's look at why knowing is important, how to find out, and how we may be able to help you.
Consequences of Not Knowing the Age
Many insurance companies are only offering Replacement Cost on roofs up to a certain age, anywhere from seven years to twenty years. So it's important to know exactly how old your roof is, make sure it doesn't need to be replaced, and make sure it wasn't supposed to be replaced but the previous owner didn't take care of it.
So if your roof is too old, or if your insurance company doesn't offer replacement coverage at all, you won't get the total cost of the roof replacement reimbursed from insurance.
Actual Cash Value
Instead, most insurance companies now base what they pay on the Actual Cash Value. They look at two factors to determine that:
- The age of the roof.
- The lifetime value of the roof.
How it Works
Let's say someone has a roof that costs $12,000. If they do have replacement coverage, then they pay their deductible, say $2,000, and the insurance company puts on the new roof.
But let's say they don't have replacement coverage. Then it's based on the Actual Cash Value. Here's how that would work. Most roofs are 20 or 30 year roofs. So let's assume a 30 year roof that was put on 10 years ago. In the insurance company's view, that's now a $8,000 roof, not a $12,000 roof. So they pay that same deductible of $2,000, but the insurance company will only pay for $6,000. Guess who has to make up the difference of $4,000?
And if the roof's older, it becomes even more out of pocket. We'll spare you the actual math, but here are the numbers using that same roof:
- 10 years - You pay $6,000
- 20 years - You pay $10,000
- 30 years - You pay the entire $12,000
That's why it's important to know the age of your roof and the lifetime value.
Finding Out The Age of Your Roof
We receive calls all the time from clients looking to insure a home they're buying, but they don't know the age or lifetime value. Fortunately, there are three places you can get this information:
- The realtor
- The seller
- The inspection
You don't want to proceed in closing until you have that information. Unfortunately, often sellers aren't completely forthcoming because they don't want to pay out of pocket to replace the roof. That can cause delays and headaches for you during the closing process.
Can Thrive Insurance Help?
Because we value our clients and want them to have the best information possible, we can assist with determining the roof's age and lifetime value during the home buying process. Sometimes, even if you've just moved into a new home and discovered the roof is in shambles, it's still not too late.
In those situations, we have roofers we trust to go out and inspect the roof. As our client, this gives you another set of eyes and more information, so you can make the best decision possible.
We can also pull the loss history on a house to determine if there was a payout for a new roof in the recent past. However, it is common to see a payout for a roof, but the roof on the house was never actually replaced.
Again, the big issue for home buyers is that all this can cause delays. But as long as we can get in writing that the roof is going to be replaced, you'll be able to move forward.
We want you to have peace of mind during the home buying and insurance claim process. If you need further clarification or have more questions, we are always happy to sit down with you and discuss them.
SEE ALSO: Are You Prepared For Total Loss?
SEE ALSO: Do You Need Renter's Insurance?