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Team RKG Blog

Bidding Your Roof: Understanding the Insurance Game

Has your insurance carrier recently totaled your roof and approved you for a roof replacement ?
It might feel like the most logical thing to do now is to get 3 bids from different contractors for your project, in fact, your insurance carrier might have even advised you to do so! Now, here lies the question: whose benefit do they do that for-yours or theirs?

Let’s break down how this process works.

They approve your roof and establish a replacement cost value (RCV). They have now agreed they will pay UP TO that amount to have your roof replaced, minus your agreed upon deductible. This pricing comes from a 3rd party software, Xatimate, who establishes proper market pricing. If you are using a legitimate, insured company, that uses warrantable materials, and trained crews who install systems up to manufactured specs, this is what the project should cost.

Up to this amount will be dispersed in 2 checks. One at the beginning of the project and the next after the contractor sends a certificate of completion and photos into the insurance company verifying the job has been done. If the contractors invoice is LOWER than Xactimate pricing, they will adopt that amount as the replacement cost value and subtract the deductible from that price, releasing that amount of funds.

  Example: Xactimate pricing establishes the RCV at 10k and the homeowner has a deductible of $1,000. If the entire 10k is invoiced for, the insurance pays a net claim of $9,000. If a contractor bids the job at $8,000, when they invoice for that amount, the insurance carrier will deduct the deductible from that amount and release two checks totaling $7,000. In order to collect the entire net claim, the entire replacement cost value Xactimate established has to be invoiced for.

If you’ve followed me this far I’m proud of you! I hope you now see that receiving a CHEAPER bid when using your insurance to cover your roof replacement saves your INSURANCE CARRIER money and gets YOU just that, a CHEAPER roof. In example one the carrier paid out $9,000. In the second example the contractor invoices for $8,000, the carrier paid out $7,000, and the homeowner paid the deductible of $1,000 OUT OF POCKET to make up the difference in what the contractor bid and what insurance paid.

Could it be your insurance carrier is playing on your human logic in order to save themselves some cash? We don’t want to accuse anyone of anything…….

We like homeowners to be logical as well. That’s why we say to INTERVIEW 3 contractors and choose the one you feel most confident with your home in their hands! When working your insurance claim, do they have licensed adjusters on staff to know exactly what damage your roof needs to qualify for replacement preventing wasting your time or the insurance carriers? Do they carry adequate insurance? Are they preferred with the manufacture of the product they install? Do they use upgraded components such as synthetic underlayment, ice and water shield, starter shingle, hip and ridge? Do their crews tear all the way down to the decking? Are they knowledgeable in ventilation? What does their warranty look like? ASK FOR REFERENCES!

The idea here is not to sign up for a cheap roof, it’s to get the BEST roof for your claim. An insurance specialist contractor will specialize in working your claim and ensuring you get proper pricing to do the project correctly and get you the best quality system possible!

The truth is, you don’t want someone who can or would do your roof for BELOW market standard because there is no room to cut corners when it comes to your home, especially just to save major insurance carriers money that you pay them in every year! We say there are 4 ways to L.I.M.P. through a roof project to CHEAPEN it, but a QUALITY Contractor won’t do them:

We can’t limp on LABOR.
There are “roofers” who come from Home Depot parking lots and work for a day rate, but there is no way to know their skill set or history. It’s important we don’t limp on labor so we can use professional crews who are trained to install systems up to manufacture specs protecting the homeowners warranty.
We can’t limp on INSURANCE.
We hate to admit this but, Roofing in Texas is an unregulated industry and there are massive amounts of “roofers” who are not even insured. If something happens while they are on your property, it’s important you’re covered and protected!
We can’t limp on MATERIALS.
Believe it or not, you can actually buy “black market” shingles. That’s right, straight from Stan-In-A-Van. Sometimes they are stolen, sometimes they fell off the back of a truck, stabbed with a forklift, or tossed out by a manufacture after failing their warranty inspections. Either way, you don’t want to risk these shingles being used in your project from Chuck-In-A-Truck roofer cutting corners to do a “cheap” roofing project. It wouldn’t make sense to replace damaged shingles for damaged shingles….. and most importantly, this product has NO WARRANTY!
We can’t limp on PROFIT.
Sure this is where most consumers would say, “YEAH! Profit! Cut corners there!”
We get it. We are consumers in other industries and are human like everyone else…. I LOVE free coffee and I can assure you I’m not concerned about 7 elevens profit margins when I utilize that 7th cup!
HOWEVER, let me invite you to see this from another angle. Consider two things: 1) Roofing in Texas holds the strike out record for companies who go out of business. 2) A reputable company will put a labor warranty on their work. The longer the better right?
We have to MAKE MONEY to stay in business so we can be around in 5 years to honor our warranties for our homeowners. We don’t need to get rich off one customer alone, but we have to keep acceptable profit margins for the company to afford to continue to be a reputable company.

 

The name of the game on an insurance job is to understand your insurance is covering the cost. It’s your right as the insured to choose your contractor and your carrier will pay for the quality of system you choose, no more, no less, whatever that might be!