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How insurance company payouts now work in Texas?

Back in the day if your roof needed replacing due to a covered event, your insurance would send you a check for the total cost of replacement minus your deductible and call it good.  Now, due to insurance company lobbying, your payment is split into two checks.  First, Insurance companies will write you a check called “Actual Cash Value”.  And then after the roof is replaced you can submit an invoice from us and get the second check called “Recoverable Depreciation”.  The actual cash value check amount is calculated using the following formula. 

Replacement Cost 

-Recoverable Depreciation 

-Deductible 

=Actual Cash Value 

Most homeowners are familiar with their deductible but what is “Recoverable Depreciation”?

 (Straight from a Texas Insurance Company) 

The Loss Settlement Provision of your policy provides payment for the reasonable and necessary cost to repair or replace property involved in a covered loss. Because this policy benefit depends upon actual restoration of the property, your initial payment may consist of the actual cash value only, such as the amount after deduction for depreciation. Recoverable depreciation refers to the potential reimbursement amount upon completion of repair or replacement. 

After repair or replacement is complete, we calculate your recoverable depreciation as the lesser of the amount necessary to repair or replace the damaged property or the amount you actually spent, minus your deductible and any amount already paid for the damaged property.

In plain English, the insurance company holds back the value of your roof they deem to have been depreciated and then gives it to you after you provide them proof the replacement has been finished.  For Example, if your roof is a 30-year roof and it is 15 years old, they hold back 50% of the money.  If it is a 25-year roof and only 1 year old, they hold back 4% of the money.  This holdback benefits the insurance company in two ways.  If you do not complete the replacement within 180 days, or file for an extension, they are not obligated to pay you a dime of what they held back.  Secondly, is that they require you to submit an invoice from your roofing company in order to receive the holdback money.  If you found someone to do it for less than the insurance company estimated, they will subtract the difference out of what they owe you and give you less.  Here is an example

EXAMPLE

Your insurance company determines it costs $14,000 to replace your roof  

+ Replacement Cost $14,000

– Minus Recoverable Depreciation of $7,000 (15-Year-old, 30-Year roof)

– Minus Your Deductible $2,500 

= Actual Cash Value Check $4,500

You get bids from a couple different roofing companies and choose one that came in at $11,500 to replace the roof; thinking that you can save your deductible.  Once the roof is replaced, you send in the roofer’s invoice to the insurance company to get your $7,000 recoverable depreciation check.  To your surprise, they only send you a check for $4,500.  

When you shop for lower prices, you are not saving yourself any money, you are saving the insurance company money.  Insurance companies don’t let homeowners get out of paying their deductibles.  That is why the most important thing to consider when choosing a roofing company is how much value you are getting for the deductible you have to pay.  At Agave Roofing we offer significant free roof upgrades to extend the life and increase the curb appeal of your roof so that you can get a roof that lasts significantly longer and looks significantly better all for free.  Our two insurance program options are detailed below.  

Option 1-Complimentary Roof Upgrade Program 

This is a program for property owners looking to get the most out of paying their deductible.  Agave Roofing will provide a complete complimentary upgrade, transforming your roofing system for significantly increased longevity and curb appeal to ensure you are getting the greatest value possible from the deductible that you pay.    

Example (Values based off of average roof size)

-All you pay is your deductible and your insurance company pays for the rest 

-Agave Roofing works with your insurance company and upgrades your roof in the following ways, free of charge (Substitutionary Upgrades Available)

-3-Tab Shingles (25-Year) to Dimensional Shingles (30-Year) ($1,500 Value) 

-Entry Level Hip and Ridge to High Dimension Hip and Ridge ($420 Value)

-Felt Paper to Synthetic Underlayment ($450 Value)

-No Venting/Static Venting to Low Profile Ridge Vent ($600 Value)

-No Drip Edge/Galvanized to Premium Painted Metal Drip Edge ($740 Value)

Average Total Complimentary Upgrade Value $3,710

Option 2-Production Pricing Program

This is a program where we complete your re-roof at our production level pricing.  The goal of this program is to LEGALLY keep owners from having to pay their full deductible.  This program ONLY works if your roof was relatively new when it sustained damage meaning that the majority of your payment from the insurance company will come in your “Cash Value” check and not the second check called “Recoverable Depreciation”.  Under this program, the homeowner will not attempt to collect their recoverable depreciation because once the insurance company sees that you did not pay market rate for your roofing job, they will reduce your payment to what you actually paid minus your deductible.  It is important to note that there are many other “Creative” ways a roofing contractor will offer to pay your deductible but this is classified as insurance fraud in Texas.  

Example (Actual Past Job)

-Total Covered Replacement Cost $12,470

-Less Recoverable Depreciation $1,247 (3-Year-old, 30-Year shingle roof) 

-Less Deductible $2,500

-Actual Cash Value Check $8,723

-Production Replacement Pricing was $8,019, saving the client their entire deductible and putting over $700 in their pocket while still getting the same quality roof.

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