11 Mistakes Homeowners Should Avoid Making When Filing an Insurance Claim
Severe weather in Texas is always just a question of when and where. Every year hundreds of thousands of hail claims are filed in Texas. Actually, Texas is first in the nation for hail claims representing 28% of all hail claims over three consecutive years. Add in tornadoes and high wind, and you are playing the Russian Roulette of storm damage. Your only recourse is to be prepared and educated. In the last 17 years, we have worked on thousands of insurance claims, and we have seen every bad scenario. To help homeowners, we have compiled a list of 11 mistakes homeowners should avoid making when filing an insurance claim.
Table of Contents
- Not Filing a Claim
- Accepting a Denied Claim
- Filing a Minor Claim
- Hiring a Storm Chaser
- Hiring a Public Adjuster
- Not Paying Deductible
- Getting Estimates
- Not Completing the Work
- Hiring Multiple Companies
- Not Asking Questions
- Doing Nothing
1st Mistake to Avoid – Not Filing an Insurance Claim
The biggest mistake, and I repeat the biggest mistake you can make, is to NOT file an insurance claim when your home has been damaged in a storm. It is a common misconception that your insurance rates will increase if you have large storm claims. However, these are unfounded. Insurance companies are not allowed to increase rates or deny a policy’s renewal due to any natural act like hail, wind, and tornadoes. This is because an act of nature is out of your control. Therefore, not the dollar amount of a claim nor the number of claims filed due to storm damage can even affect your insurance rate negatively.
$3400 is the average a Texan will pay for homeowner’s insurance annually ($300,000 Liability), while full roof replacements claims are filed every 9 years on average. That’s about $30,600 paid into the insurance company before ever using your benefits. The average cost of a roof replacement for a 2500sf home is approximately $9,000 – 13,000, much less than the $30,600 paid in already. $3400 a year puts Texans at the 5th most expensive state in the nation for homeowner’s insurance.
“Basically, every resident of North Texas has a similar chance of seeing hail in any given year,” David Finfrock said. “It’s just the luck of the draw as to who actually gets hit.”
2nd Mistake to Avoid – Accepting a Denied Claim
After receiving a denied claim from the insurance company, you should immediately request a reliable roofing company to do an inspection. It is imperative to have a second opinion to protect yourself. Many people wrongly assume that the insurance adjuster has their best interest in mind, but that’s simply not the case.
Insurance companies payout large sums of money during storm season, and often they try and cut costs by denying some claims. Statistically, only 20% of insured who have been denied will protest the claim. Additionally, even if the claim is not denied, it is often underwritten. In this author’s experience, 60 – 70% of claims need supplements to cover all the related storm damage repairs. These supplements could be for missed items, additional square footage, or underpaid items.
Most roofing companies will provide a free roof inspection assuming that they will be awarded the work if a claim is approved. A quality roofing company will provide a comprehensive storm damage inspection geared to getting all of your storm damages approved and paid. They will notate all damage, provide pictures and estimates to the insurance company.
3rd Mistake to Avoid – Filing a Minor Claim
We already learned that filing a claim for acts of nature can’t increase your insurance rates, but you should still be careful before considering filing a claim for minor damage. Why? Any property insurance claim in Texas requires the insured to pay a deductible, which is typically 1 – 3% of the coverage. For example, the insured would pay $3000 on a $300,000 policy with a 1% deductible.
You can easily see in this example that the cost of the needed repairs would need to be greater than $3000 for there to be any benefit to filing a claim. But, wait, there’s more!
Texas is well known for severe weather and understanding that some minor and inconsequential damage might be better off waiting before being repaired. If the damages do not present any potential for leaks or increased damage over time, like light soft metal dents, we often recommend waiting until after the storm season is over. There could be a large storm coming that requiring a full roof replacement, and those minor repairs would have to be done again anyway.
4th Mistake to Avoid – Hiring a Storm Chaser
Every honest contractor and company in America despise these guys. Storm chasers chase storms across the map scamming good people out of their money or, at best, providing poor quality work. These guys give all the roofing companies bad names. They promise to pay you deductible, upgrade your roof and send you on a cruise as long as you commit today. Once they pick up the first check, you never see them again. Or perhaps, if you are lucky, they will put your roof on badly with cheap materials to boot, and when you call them for a warranty issue, which is inevitable, you get the voicemail.
Not all out-of-town roofing companies are “storm chasers”; in fact, it’s often important that companies come from all over Texas go to storms to help customers get their roofs replaced. Many cities and towns do not have enough roofing companies to handle widespread damage resulting in customers having to wait very long periods of time.
Research your company. Make sure the guy at your door is legit. In less than 5 minutes, you can review their website and search for reviews. You can tell a lot about the company from its website, and any legitimate company should have an internet presence in 2020.
5th Mistake to Avoid: Hiring a Public Adjuster
In most cases, hiring a public adjuster is a mistake. Public adjusters charge 10% of the claim amount which you will be responsible for paying out of pocket. Some instances may require a public adjuster, but competent roofing companies should easily be able to provide the same service without the additional cost.
Baker Roofing & Construction has licensed adjusters on staff for just this reason. We know the importance of providing insurance companies with accurate information, proper documentation, and complete storm restoration loss estimates. These services are standard for Baker Roofing, and it doesn’t cost you anything.
6th Mistake to Avoid – Not Paying Your Deductible
For many years, it was common practice for contractors to waive the deductible for roof replacements and other property claims. While this practice was common, it was never truly legal. Many companies were forced to compete with low-balling companies and began providing incentives that effectively waived the deductible. Although no paying your deductible does seem very attractive at first notion, it forced these companies to operate on low margins, making them unable to provide the best service and often not being able to honor warranties.
In 2019, Texas lawmakers made it effectively illegal to provide any kind of deductible assistance. There is absolutely no gray area to work within anymore. HB 2102 went into effect on September 1st, 2019. Read more about the deductible law in this article – Do I have to pay a deductible for hail damage to my roof?
Be aware of any contractor telling you that he can help you with your deductible.
7th Mistake to Avoid – Getting Estimates
The next mistake to avoid is getting estimates. There seems to be quite a bit of mystery surrounding the insurance claim process, and I think this goes back to the poor practice of waiving deductibles. As mentioned before, deductibles must be paid by the insured; let’s briefly discuss why.
Insurance claims are an estimate for the cost to repair all the related storm damages. The full cost of these damages is called the Replacement Cost Value (RCV).
Depreciation is the amount an item’s value is reduced over time. There is both recoverable and non-recoverable depreciation. Here we will be talking about the recoverable depreciation.
Depreciation is withheld from the RCV amount until all repairs have been completed and invoice(s) for the total RCV amount has been submitted to the insurance company.
All that is to simply say that contractors work from the insurance estimate. If a contractor were to provide you with a cash estimate that was less than the insurance RCV, then you would not be able to legally claim all of the recoverable depreciation. It is also far more likely that you will be given an estimate that is more expensive than the insurance estimate.
8th Mistake to Avoid – Not Completing the Work
The temptations are strong, oh so so strong to pocket the money and run. Ok, perhaps not run, but you get the point.
We have seen the scenario over and over again, the customer files the claim, gets paid, and keeps the money instead of doing the repairs. They may have paid off a credit card, bought a new couch, or put it into savings; however, by doing that, you can’t collect the depreciation money.
All that is fine except your damages are still not repaired. These damages could get worse over time, leading to much worse damage and costly repairs. But, because you haven’t completed the repairs from your previous claim, your insurance company may deny you due to negligence. Even if they do approve your claim, it will be for only the new items that were damaged. They will not pay you for the same unrepaired item twice. It is wise to complete all the repairs with few exceptions.
9th Mistake to Avoid – Not Asking Questions
Choosing a roofing company to work with is incredibly important, as you know from what we have touched on above. Remember to always research your roofer to make sure they are a legitimate company. Asking the following questions will help you choose the correct company. When every company is working for the same price, it may be hard to see which company is actually the best fit for your repairs.
Questions You Should Be Asking
- What is your warranty?
- May I have a list of references?
- What materials do you use?
- What do you use for valley protection?
- Do you have general liability insurance?
- Do you remove all shingle layers and felt?
You should feel comfortable with the representative and the company before signing any documents. Some of these claims, like tornado claims, can be quite extensive and require months to complete all the repairs. It is important that you have chosen a company that can handle your work and gives you a professional customer experience.
10th Mistake to Avoid – Hiring Multiple Companies
It is very rare that a storm damage claim does not include repairs from multiple trades. For example, hail claims may call for a fence refinish, a/c condenser comb, and roof and gutter replacements. You could hire a roofer, a painter, an HVAC technician, and a gutter company. You will have to negotiate the price with each contractor, collect invoices and then submit those to the insurance company. However, some companies offer full restoration services like Baker Roofing & Construction.
Our goal has always been to ease the stress of storm damages by providing complete and comprehensive restoration services. Once your claim is filed, we will handle the claim every step of the way. We will keep you constantly informed and will communicate with the insurance company for any additional repairs needed. Once the work is complete, we will finalize the claim by submitting all the appropriate documentation to the insurance company.
11th Mistake to Avoid – Doing Nothing
Remember when I said, way at the top, that not filing a claim was the biggest mistake? Well, that’s still true unless you didn’t do anything at all. If your home is in severe weather with high winds, hail, or blowing debris, then you must do an inspection to see if your home needs attention. The worst thing you can do is bury your head in the sand and pretend nothing happened. Rarely has anything gotten better by ignoring it. A small leak could cause thousands of dollars in repairs and property loss if left unresolved.
So, what should you do?
DO look for dents in gutters troughs and downspouts
DO look for blemishes on the fence that could be from hail
DO inspect the roof for any missing, bent or lifted shingles.
DO look for blown off roof vents
DO look for water spots on ceilings
These are all indicators that you could have roof damage and should call a roofing company to perform an inspection. They will recommend whether you should file an insurance claim or give you a list of repairs that need to be performed. It always better to act initially than to react to the consequences of nonaction.
Being prepared for the aftermath of severe weather is just about knowing what you should expect and understanding what mistakes to avoid. Hire a company that you can trust to complete the work with the highest quality and attention to detail. It is the details that are hard to see that cause the biggest leaks.
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