Most insurance companies either refuse to insure homes with older roofs or price the policy so high that it’s cost prohibitive.
The roof surfacing payment schedule provides these homeowners with coverage at a more affordable price. And it allows homeowners to replace their roof when necessary rather than when it reaches an inflexible age cut-off.
A roof surfacing payment schedule is an endorsement that modifies how your roof is insured. Without this endorsement, a roof is typically covered for its replacement cost – that is, how much it would cost to completely replace the roof with similar materials at today’s market rate.
Once the roof payment schedule is attached to your policy, it lowers your premium significantly and covers the roof surface for its actual cash value – a fancy insurance term that means the roof’s depreciation is factored into your payout for wind or hail damage to the roof. Roof depreciation is based on its age and surface materials.
In this case, a roof surface can mean its shingles, tiles, underlayment, felt, membranes, vents, drip edges, turbines, skylights, or other roofing components.
The nice thing about this endorsement is that homes with older roofs can actually get insured instead of being turned away or forced to go to state-run insurance programs for coverage. And if you have a new roof, the depreciation deduction is very little, but you still save money on your home insurance premium.
This endorsement only applies to roof surfaces for wind and hail damage. Other damage to the home is paid on a replacement-cost basis as usual.
The roof surface payment schedule is designed to make an HO3 homeowners insurance policy more affordable for homes with older roofs. But anyone who wants to save more on their premium would be a good fit for this add-on.
For HO3 policies, this endorsement may apply for homes with:
The biggest benefit of this type of coverage is that it lowers your premium in exchange for a lower amount of roof coverage – but only for wind and hail damage. In short, the older your roof, the bigger your discount.
It’s also useful if you don’t want to pay for a brand-new roof in order to get insured to meet your mortgage requirements.
Roof claims for wind or hail damage are paid out on a depreciated value based on the roof’s materials and age. The depreciated value is calculated by subtracting the roof’s depreciation from its replacement cost.
This is the depreciation schedule:
So say your shingle roof is heavily damaged during a windstorm, and it would cost $15,000 to replace it. Now let’s say your roof is 12 years old.
According to the schedule, your roof has depreciated by 48 percent (4 percent times 12 years = 48 percent). That puts a potential payout for this claim at $7,800: $15,000 (replacement cost) minus $7,200 (depreciation) = $7,800.
The roof surfacing payment schedule only applies to roof damage caused by wind and hail events. That includes:
So if the roof is damaged by another event, like fire, the roof surfacing payment schedule wouldn’t apply.
No, even with this schedule, the rest of your home is still insured up to its coverage limits. So say a hurricane tears a hole in your roof and damages the sides of your home and windows. Damage to the roof would be paid out in full minus the roof’s depreciation. The rest of the damage would be paid at what it costs to rebuild without subtracting depreciation if you have replacement cost coverage.
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