Texas home owners insurance

Recent massive hail storms have hit Texas and many owners find they have very poor insurance. I know the Standards exclude insurability and determining age of the roof. I even restate it in my report. However it seems many owners have no clue and when they get hail struck they get screwed.

This is language I am putting in my report. Its too long and needs to be written by someone more skilled than me. Feel free to rewrite it and post.

Example
*Important: Research your property casualty insurance (home insurance) carefully. Many insurance providers offer actual cash value (ACV) instead of replacement cash value (RCV) policies. ACV means they deduct their estimate of depreciation from the settlement and this shifts more cost to you. Google “what is ACV versus RCV” and understand the differences. If a hail storm destroys the roof you might be paid only the depreciated value less the deductible. This can be a significant expense. Additionally, many providers include policy limitations that exclude their opinion of damage to cosmetic items (dented gutters for example). Be aware of your deductible amount, it can be expensive. Lastly, know that some companies will cancel coverage if they think your roof is more than 15 to 20 years old (a variable number). All of these considerations can mean your roof may have very little insurance coverage. This home inspection does not determine the age of the roof or its insurability. You should have your insurance company approve the roof to their underwriting standards and be aware of the policy language. Also be aware that they can change policy language and coverage; do not take them for granted.
*

End of statement

Here is an example.

14 year old comp roof 50 squares. In Texas the standard deductible is 2%. Home is valued at $500,000.

20,000 Replacement cost

  • 9,000 depreciation
  • 10,000 deductible

Means you get a check for $1,000. Sure the numbers can vary a bit but the point is you do not want the buyer coming back to you angry.

This advice is not limited to Texas.

Homeowner’s insurance is literally a gamble … where a homeowner bets his premium that his house will burn to the ground (or otherwise damaged) and the insurance company bets the amount of coverage that it won’t. Their “bet” is carefully spelled out in a series of small printed contingencies in a one-sided contract written by the insurance company and referred to as an “insurance policy”.

Roof damage from wind and hail is one of the most common claims in the south and midwest and insurance adjusters spend many hours per year training on how to protect the interests of their employer (the insurance company) with lots and lots of hands on training through weather events over the course of a year.

Unfortunately for the majority of homeowners, the insurance policy is not read until time to file a claim and, when it is read, the language of the policy is not clear and easily understood.

In some policies, the insurance company will be exempt from matching existing materials with new materials in kind or color in cases of repair or partial replacement. Where policies are silent, the adjuster may attempt to assert his opinion as fact in offering improper and inexpensive repair options.

The following are the most important facts for homeowners to know and understand about their homeowner’s insurance:

  1. Everything is negotiable.

  2. When coverage is applicable, the insurance company owes what it costs (NOT what they estimate it to cost) to repair or replace the damaged material.

  3. The computer generated estimate that an adjuster produces is 99% likely to have come from software that is sold from a company that is managed and operated by executives from the insurance industry and not from contractors who actually perform the work.

  4. The insurance adjuster has a fiduciary duty to protect the financial interests of the insurance company and not the policyholder. An “independent insurance adjuster” is an adjuster who contracts with multiple insurance companies and also has a fiduciary duty to protect the financial interests of the insurance company and not the policyholder.

Good information both of you thanks

Great feedback. Someone rewrote it for me. For your review.

Roof Insurability Awareness: Many Home Insurance providers may offer Actual Cash Value (ACV) instead of Replacement Cash Value (RCV) policies. If your policy claims are calculated on an ACV, your insurance company may pay a depreciated value less the deductible. This may result in a significant expense to the insured party should your roof become hail / storm damaged. In addition, many insurance providers may include specific policy limitations which can exclude their opinion of damage to cosmetic items (dented gutters for example). Lastly, know that some companies may cancel coverage if they think your roof is over a certain age. This home inspection does not determine the age of the roof or its insurability. You should have your insurance company approve the roof to their underwriting standards and be aware of the policy language. Recommend you research your policy and recognize the risks.

Here is another way that insurance companies in Texas and other states are denying claims for wind and hail damage to roofs.