Understanding the Texas Property Insurance Claim Process
Navigating Deductibles, ACV, RCV, Recoverable Depreciation & the Role of a Reputable Local Roofing Contractor.
Following a natural disaster or property damage in Texas, it’s essential to understand the insurance claim process. This guide will provide an overview of essential concepts, including deductibles, Actual Cash Value (ACV), Replacement Cost Value (RCV), recoverable depreciation, and the role of a reputable local roofing contractor.
Deductible
A deductible is the amount a policyholder must pay out-of-pocket before the insurance company covers the remaining costs for a claim. Deductibles vary based on individual policies and are typically presented as either a flat dollar amount or a percentage of the insured property’s value. It is the customer’s responsibility to pay the contractor the deductible amount per the policy.
Example: If your deductible is $1000 and the value of your claim damage is $10000, then the amount the insurance company will pay in this instance is $9000 and the insured is responsible to pay $1000.
Actual Cash Value (ACV)
ACV refers to the current market value of your roof and damaged items based on their age, considering depreciation and wear. In property insurance claims, ACV is usually used to determine initial payout. The insurance company calculates ACV by subtracting depreciation from the roof’s current replacement cost. The initial check amount is often smaller than expected as the policy deductible is also subtracted from the initial payout.
For example, if a 10-year-old roof with a 20-year lifespan suffers damage, the ACV would be half the original cost.
Replacement Cost Value (RCV)
RCV represents the full cost of replacing damaged property with new items of like kind and quality. RCV coverage is the most common and is usually recommended to be adequately covered in the event of a total loss. When selecting an insurance policy, insurance brokers are sometimes less than clear when offering a lower premium option by not informing homeowners of the difference between ACV and RCV coverage. RCV policies cost more but provide full replacement cost payouts for claims, whereas ACV coverage decreases over time as the roof ages and customers can be surprised with large out of pocket expenses to cover replacement cost after a total loss storm event.
Depreciation
Depreciation refers to the loss of value over time due to wear and usage. In the claims process, the depreciation amount is withheld by the insurance company until the work is completed and the applicable invoices and certificate of completion is submitted. To receive the recoverable depreciation payout, proof of completed work with proof of paid deductible and ACV amount must be submitted.
Recoverable Depreciation
Not all depreciation is recoverable and is determined by the type of policy coverage in place. Only replacement cost value (RCV) policies allow for recovery the depreciation amount after making repairs or replacing damaged items.
Non-Recoverable Depreciation A portion of the depreciation that cannot be recovered or reimbursed. Non-recoverable depreciation signifies a limit to the claim payout, with the policyholder bearing responsibility for the remaining repair or replacement costs. Again, insurance brokers are sometimes offer a lower premium option by not informing homeowners of the difference between ACV and RCV coverage. RCV policies cost more but provide full replacement cost payouts for claims, whereas ACV coverage decreases over time as the roof ages and customers can be surprised with large out of pocket expenses to cover replacement cost after a total loss storm event.
Role of a Reputable Local Roofing Contractor
In the claims process, a reputable local roofing contractor plays a vital role by:
- Inspecting and assessing damage to the property
- Providing a detailed assessment of repair or replacement requirements
- Collaborating with insurance adjusters and reviewing insurance claim documents to ensure accurate assessments
- Recommending appropriate solutions to restore the property
- Ensuring maximized value with the use of the best names and latest product advancements
- Submitting documentation to help homeowners recover recoverable depreciation
Understanding the Texas property insurance claim process can help homeowners navigate the complexities following a disaster or damage to their property. Familiarizing oneself with deductibles, ACV, RCV, recoverable depreciation, and working with a reputable local roofing contractor ensures maximizing insurance benefits and restoring the property to pre-loss condition.
TEXAS LAW REGARDING INSURANCE CLAIM DEDUCTIBLE PAYMENT
Texas Law HB 2102 and Deductible Requirements
Under Texas law HB 2102, homeowners in Texas are required to pay their insurance deductible for property damage claims. This law was enacted to prevent homeowners from being tempted by contractors offering to waive or absorb an insurance deductible, an illegal and unethical practice. Failure to comply with this law may result in penalties for both the homeowner and the contractor. Thus, it is essential for homeowners in Texas to ensure they pay their required deductible when filing a property insurance claim.
This law was established to protect the homeowner. Roofing contractors that offer to waive, absorb, or otherwise refund your deductible are likely cutting corner. Buyer Beware! Never sign a contract presented by a pushy sales rep pressuring for signatures on deals “Good for Today Only”. Storm chasing scammers are on the scene quick, often the next day following a storm event. Always do the due diligence- research, compare customer reviews, check with BBB, and then call a local & reputable roofing contractor for storm damage assessment.
The focus of the new law is to protect property owners from fraudulent roofing companies. The wake left by these crooked companies is full of unfulfilled promises and unreturned calls. The sad results on countless roofs installed by these storm chasers are plagued by poor workmanship and the use of inferior or omitted components often leaving customers no recourse for resolution. In many instances customers have had to reach out to local contractors and into their own pockets to resolve a botched roof installation.
Insurance Claim Terminology Definitions for Roofing Customers
Deductible: A deductible is the amount a policyholder must pay out-of-pocket before the insurance company covers the remaining costs for a claim. Deductibles vary based on individual policies and are typically presented as either a flat dollar amount or a percentage of the insured property’s value. It is the customer’s responsibility to pay the contractor the deductible amount per the policy.
ACV (Actual Cash Value): ACV refers to the current market value of your roof and damaged items, considering depreciation and wear. In property insurance claims, ACV is usually used to determine initial payout. The insurance company calculates ACV by subtracting depreciation from the roof’s current replacement cost. The initial check amount is often smaller than expected as the policy deductible is also subtracted from the initial payout.
RCV (Replacement Cost Value): RCV represents the full cost of replacing damaged property with new items of like kind and quality. RCV coverage is the most common and is usually recommended to be adequately covered in the event of a total loss. When selecting an insurance policy, insurance brokers are sometimes less than clear when offering a lower premium option by not informing homeowners of the difference between ACV and RCV coverage. RCV policies cost more but provide full replacement cost payouts for claims, whereas ACV coverage decreases over time as the roof ages and customers can be surprised with large out of pocket expenses to cover replacement cost after a total loss storm event.
Depreciation
Depreciation refers to the loss of value over time due to wear and usage. In the claims process, the depreciation amount is withheld by the insurance company until the work is completed and the applicable invoices and certificate of completion is submitted. To receive the recoverable depreciation payout, proof of completed work with proof of paid deductible and ACV amount must be submitted.
Recoverable Depreciation
Not all depreciation is recoverable and is determined by the type of policy coverage in place. Only replacement cost value (RCV) policies allow for recovery the depreciation amount after making repairs or replacing damaged items.
Not all depreciation is recoverable and is determined by the type of policy coverage in place. Only replacement cost value (RCV) policies allow for recovery the depreciation amount after making repairs or replacing damaged items.
Non-Recoverable Depreciation A portion of the depreciation that cannot be recovered or reimbursed. Non-recoverable depreciation signifies a limit to the claim payout, with the policyholder bearing responsibility for the remaining repair or replacement costs. Again, insurance brokers are sometimes offer a lower premium option by not informing homeowners of the difference between ACV and RCV coverage. RCV policies cost more but provide full replacement cost payouts for claims, whereas ACV coverage decreases over time as the roof ages and customers can be surprised with large out of pocket expenses to cover replacement cost after a total loss storm event.
Base Service Charges: These are standard fees charged by a contractor for services such as providing an estimate, assessment of damages, or basic labor costs. These fees may or may not be covered by insurance, depending on the policy details.
A portion of the depreciation that cannot be recovered or reimbursed. Non-recoverable depreciation signifies a limit to the claim payout, with the policyholder bearing responsibility for the remaining repair or replacement costs. Again, insurance brokers are sometimes offer a lower premium option by not informing homeowners of the difference between ACV and RCV coverage. RCV policies cost more but provide full replacement cost payouts for claims, whereas ACV coverage decreases over time as the roof ages and customers can be surprised with large out of pocket expenses to cover replacement cost after a total loss storm event.
Base Service Charges: These are standard fees charged by a contractor for services such as providing an estimate, assessment of damages, or basic labor costs. These fees may or may not be covered by insurance, depending on the policy details.
THE ROOF INSURANCE CLAIMS PROCESS
Roof Inspection
Contact a reputable contractor from the area to inspect your roof for damage from storms. By using a local contractor, you ensure that there is someone there to handle an issue or repair if something is not right upon completion of the job.
Contact Insurance Company to File a Claim Contact your insurance company to open a new property damage claim. Inform them that you are working with Dayton Co. Roofing.
Meeting w/ the Adjuster The adjuster should reach out to you within a few days to set an appointment. Contact Dayton Co. Roofing regarding the appointment date/time and we’ll coordinate to meet with the adjuster.
Document Review You should receive paperwork (usually pdf file via email) from your insurance company detailing the deductible, ACV & RCV payouts, depreciation amount, etc. You will forward that claim file to Dayton Co. Roofing. We’ll analyze the statement and make sure that the estimates given by your insurance company are sufficient and work with the insurance company with and discrepancies or deficiencies.
Discuss Products and Options Once your total claim value has been settled with your insurance company, we will meet with you to sign your replacement contract and show materials samples for color selection etc. We install shingle samples directly on your roof to ensure satisfaction and perfect color for your home.
Roof Replacement (Typical Specifications)
Remove existing shingles down to deck.
Re-nail any loose wood. If bad or rotten wood is discovered, it will be replaced at a price of $75 per sheet. (2 sheets included)
Install 2X2 metal drip edge.
Install premium synthetic underlayment.
Install self adhering underlayment in valleys, and around pipes and penetrations.
Install new lead boots (or metal base 3n1) for all plumbing vents.
Install new mechanical vent caps and flashings as needed.
Install Starter Shingles along all eave and rake edges.
Install laminated shingles with 6 nail application (1-1/4″)
Install new ridge vent or box vents.
Install Hip & Ridge Shingles
Paint pipes, flashings, vent caps.
Provide 20 Year Workmanship Warranty & General Liability Insurance
Payment & Recoverable Depreciation Upon completion, your ACV and deductible amounts are due. Dayton Co. Roofing will send a final invoice to your insurance company with your recorded payments for release of the recoverable depreciation and any applicable supplement amounts.
Final Payment Final payment is due upon receiving the final settlement amount from your insurance company.
