What is a Deductible?
A deductible is a payment required from the homeowner during an insurance claim. It is an amount that you, as the homeowner, are responsible for paying to your contractor. To fully comprehend the concept, it is important to first understand what an insurance policy is.
Understanding Insurance Policies:
An insurance policy serves as a contract between you and your insurance company. The contract stipulates that you agree to pay monthly premiums, and in the event of unforeseen incidents such as storm damage, the insurance company will cover the costs of restoring your property, excluding the deductible amount. In understanding how deductibles work, it’s also crucial to recognize signs of damage eligible for claims, detailed in our blog How to Spot Storm Damage.
The Role of Deductibles:
You might question “I’m paying regular premiums, why am I still required to pay a deductible?” The answer is simple: insurance companies want homeowners to have some level of financial investment in the claims process. Insurance companies use deductibles to discourage people from making unnecessary claims for minor repairs or non-essential upgrades.
How Deductibles Work: An Example
Let's consider an example to better illustrate how deductibles function. Imagine you have a homeowner's insurance policy with a $1,000 deductible, and your 15-year-old roof (That was expected to last 30 years) acquired storm damage. After filing a claim, the insurance company determines that the cost of replacing your roof amounts to $10,000.
In this scenario, the insurance company depreciates your roof by half since it has only reached half its expected lifespan. Consequently, they issue a check for $4,000, considering that you must first pay your deductible of $1,000. Therefore, you will receive $4,000 initially.
To claim the remaining $5,000, you must meet specific criteria, such as:
- Demonstrating an agreement with a contractor to cover the full
replacement cost of $10,000
- Providing a Certificate of Completion
- Proving payment of your Deductible.
Deductibles and Roof Value:
It's important to note that the deductible amount does not correlate with the value of your roof. If you have a new roof worth $25,000 or a roof worth $2,000, you will still be responsible for paying the $1,000 deductible.
Beware of Insurance Fraud:
It is crucial to understand that attempting to outsmart the system by finding a cheaper alternative and pocketing the difference is considered insurance fraud. Insurance companies require signed contracts for the full approved amount before releasing the entire sum upfront. Initially, you will receive approximately half of the total roof replacement cost, known as the Actual Cash Value (ACV). Only after paying your deductible and completing the roof repair or replacement will the insurance company release the remaining amount, known as the Replacement Cost Value (RCV) or depreciation payment.
The Consequences of Avoiding Deductible Payments:
Failing to pay your deductible is not only illegal but can also lead to undesirable outcomes. Contractors engaging in insurance fraud may face legal repercussions, including imprisonment. It's essential to be a responsible homeowner and fulfill your financial obligations.
Choosing Trustworthy Contractors:
If a contractor attempts to manipulate the deductible amount, it raises concerns about their integrity and reliability. Can you be certain they won't compromise on the quality of materials or workmanship, jeopardizing your roof's longevity and, consequently, your family's safety? Therefore, it is crucial to pay your deductible and exercise caution when selecting contractors. To know more on how to spot reputable contractors for handling insurance claims, see our 7 Things to Look for When Choosing a Roofing Service Company blog
Conclusion:
Today, we have covered:
Remember, paying your deductible is an essential responsibility as a homeowner. Attempting to evade this obligation may lead to severe consequences, both legally and in terms of the quality of workmanship on your property.
If you require assistance with an insurance claim, don't hesitate to reach out to us at Augusta Roofing Pros. You can contact us at (706) - 899 - 4747, email us at customercare@augustaroofingpros.com or visit our website at www.augustaroofingpros.com. We value your feedback and encourage you to leave comments and reviews. Share this comprehensive guide on deductibles with friends who may also find it helpful. Thank you for reading!
