Is your roof more than 10 years old? Your homeowners insurance may no longer cover storm damage.
What is the “10-year rule” and how does it impact roof insurance? It’s amazing to think that contractors can install a “30-year shingle” just for insurance companies to say it’s too old to insure after 10 years. However, this is becoming increasingly common.
Why is insurance coverage for my roof changing?
Over the past several years, the property insurance industry has experienced a huge increase in the number of costly property claims. The increasing number of catastrophic weather events and the rising cost in materials is driving claim amounts higher and higher, and more frequently. State Farm reported an over $14 billion underwriting loss with property claims in 2023, similar to the over $13 billion loss in 2022. That means that in 2023, they paid out $14 billion more in claims than they took in from homeowner premiums. That’s a big chunk of money, and as the biggest insurance carrier in the United States, a major indicator for the current industry environment.
Insurance carriers cannot operate at a constant loss, but they still have a job to do if they want to remain in the business. Fortunately for them, most of their profit comes from other investments and years of homeowner premium payments when no loss was sustained.
What are the recent changes to my roof’s insurance coverage? Exceptions, limits, and the “10-year rule” of roof insurance:
Homeowners insurance carriers are beginning to impose a time limit on the life of a roof despite manufacturer’s warranties. If a roof is over 10 years old, homeowners may only have an ACV-only option for coverage, or worse no coverage at all after that time limit expires. The general idea is that a roof over 10 years old is more likely to be damaged by a storm. The recoverable depreciation that contractors and homeowners have become familiar with will no longer be money paid to the homeowner, not just the deductible amount. In a catastrophic weather event, the homeowner will be responsible for the difference in the claim total. Although this concept has been around to reduce premiums for customers and limit liability for insurance companies, there has been a consistent increase in including this stipulation in homeowner’s insurance policies. For some policy holders, the cost to replace a roof will increase after 10 years, but the amount the insured receives to cover their losses will go down. At year 17, some carriers will no longer insure the roof at all.
What can I do about this?
As a homeowner, read your insurance policy carefully and be sure you fully understand what your policy does and does not include. As a contractor, make sure the homeowner you’re working with knows that this is a part of their current policy and review it with them when discussing storm damage claims.
There are many tactics and tricks that insurance carriers and their adjusters are using to limit the cost of a property repair, the 10-year time limit is just one example. As property owners, we are very grateful to have them when we need insurance companies, and tend to ignore them when we don’t. As contractors, we rely on insurance carriers to do their part and fully fund a repair project. We can’t afford to ignore our insurance carriers, we need to be aware of all that is happening to be sure as homeowners and contractors we are getting paid correctly for the work that needs to be done to repair storm damage.