The most common claim for a Homeowners policy in Michigan is for Wind and Hail damage, per the Buckley Law Firm, at just under 40% of all claims. So it is no surprise that Insurance companies want to do everything they can to mitigate their risk, related to Wind and Hail. Contractors often go into neighborhoods knocking on doors and offering to inspect your roof for free. They may very well represent a reputable and quality roofing contractor. However, They may also be scammers trying to use you to commit insurance fraud. When a contractor “creates” damage for the purpose of filing an insurance claim, it can be considered insurance fraud. You can help to avoid this by doing your due diligence to ensure thy are a reputable company with proper licensing and insurance, as well as reading their reviews.
Because of the high rate of fraudulent claims, Carriers are coming up with creative ways to combat this. There are 3 common ways to limit the amount the Insurance company will pay out:
- A separate deductible for Wind and Hail claims.
- Pay out Wind and Hail claims on an Actual Cash Value basis.
- To include Matching Exclusions in the policy language.
Most carriers now offer a second deductible line to address wind and hail. So you may have a $500 deductible for all section I losses except wind and hail. Often times that separate deductible will be a Percentage of your Dwelling coverage. The most typical is 1%. So if your dwelling coverage is $250,000 your wind and hail deductible would be $2,500. It is important to read your policy declaration and the initial paperwork to know if you have a separate Wind and Hail deductible.
A few carriers have begun to add endorsements and/or language that allows them to pay out claims related to your roof on a different scale. So all though you may have replacement coverage on your dwelling, your roof may have Actual Cash Value coverage. This means that the claim would factor in depreciation. In this case if you have a 30 year guaranteed roof that is 15 years old, they would depreciate it by 50%. So if the roof costs $6,000 to replace, and you have a $1000 deductible, it would be calculated as such, $6000 x 50% = 3000 – 1000 deductible = $2,000 toward your $6,000 roof. Hence it is important to ask your agent how roof damage would be covered under your policy.
Lastly, some carriers have matching exclusions. This means that if just part of your roof or siding are damaged, the carrier can replace just the damaged area with the closest match possible. While this seams reasonable, what if it is obvious that the materials do not match, because it is a color that is no longer available or because sun damage has altered the color. In most insurance contracts they would have to replace everything to match.
In conclusion, there are many moving parts in an insurance contract that go beyond the declaration page and separate the value of one carriers contract over the other. This not to say it is a bad thing, unless your unaware of it. These measure help the insurance carrier be more competitive, allowing them to offer you a better annual rate. This can help to lower your monthly mortgage payment and quite possibly be the difference in whether or not you get approved for a loan.