The home insurance landscape in Wisconsin is changing and changing very fast. If you don’t keep up you are going to be left behind! Gone are the days of companies offering $500 deductibles and replacement cost for your roof. Let’s start right there. Your Deductible is the Portion of a Claim That YOU Pay…
So let’s use the following example:
A storm comes through your neighborhood and hail damages your roof. That roof might be $20,000 to replace. If your deductible is $500 you would receive a bill for $500 from the roofing company once they are finished and that would be your portion of the claim that you pay.
The process is slightly more complicated than that but you get the picture. That is an overview of what a home deductible is.
The more complicated and tricky part to this is how your roof is covered. There are two main types of roof coverages in Wisconsin. There is replacement cost and actual cash value. Replacement cost means the insurance company will pay what it costs to replace your roof with a brand new product whether your roof is 10 years old, 15 years old, or 20 years old. In the example above you would have your company pay the $19,500 and you would pay the $500 for that hail damage claim.
But what if your roof is covered with ACV or actual cash value, or even sometimes this is referred to as a roof schedule? This means that the company will determine how much life is left on your roof and pay your claim according to that figure. So let’s revisit the example above and say that the roof was put on your home in 2010. Your roof is 14 years old at this point and say the company uses a roof life of 25 years That means your roof is 56% worn. You would receive a check for 44% of what your roof is worth right now and then they would have you pay that $500 on top that. In this example you would receive a check for $8,300. ($8,800 minus your deductible)
You are going to need to take that check and purchase your $20,000 roof.
The scariest part in all of this is that I would estimate only 5% to 10% of people I talk to know the following:
- What their home deductible is and…
- What their roof coverage is like. An actual cash value roof policy covers you nowhere near as well as a replacement cost policy.
Let’s jump back and talk about deductibles. Another thing we are seeing is companies changing deductibles to higher deductibles and even percentage deductibles at renewals. Sometimes people have NO idea they have a 1% deductible or even a 2% deductible. Don’t know what this means? Don’t worry. A lot of people don’t. It means that if your home is insured for $500,000 (this could be coverage A, or dwelling, etc) your deductible is 1% or 2% of that number. That means your deductible is $5,000 or even $10,000. Scary huh? We agree!
After reading this I want to share with you one last terrifying thought. Some companies are even doing the % deductibles or higher deductibles WITH the ACV roofs. Yes! That $8,800 check you would get could be $3,800 with carriers here in WI with that 1% deductible on that $500,000 house. $3,800 to replace a $20,000 roof doesn’t sound like a great plan to me and there are handfuls of people who have NO idea they have this.
At our agency we will make sure you have the following:
- A plan that works for you and YOUR budget. If you need a replacement cost plan with a $1,000 deductible we can do that!
- You are going to know WHAT kind of plan you have and the reason behind it.
- You are going to have an agency that offers multiple carriers for this ever changing home insurance landscape.
Ask yourself now. Do you know what your home deductible is? Do you know what your roof coverage is? Sometimes companies have one deductible for hail / windstorms and then one for other perils (bad things that happen like fire, theft, water, etc).
After reading this I hope you determine you can’t afford to NOT know the the ins and outs of your home insurance. We are here to help! Maybe you have an actual cash value plan and you might be able to save money AND get a replacement cost plan. Trust me when I tell you, it has happened before and will happen again! We look forward to speaking to you and if we can ever answer any questions you have please let us know!
