MSN posted an interesting article earlier this year noting changes home insurance companies are making. These changes tend to affect older homes in general, and homes with older roofs specifically. These changes are popping up across the US impacting home owners in the Gulf coast states, Midwest, as well as California and Colorado.
Coloradans are dealing with policy changes on homes with wood shake roofs. Closer to home, some Oklahoma policies are changing the roof coverage from replacement cost to actual cash value on roofs that are over 10 years old. Texans began seeing these changes over the last one to two years. These changes fell into one of two categories; some companies either raised deductibles or became more stringent on writing homes with older roofs.
Higher Deductibles: Over the past several years, most Texas home insurance policies have had at least two policy deductibles, one for wind and hail and one for all other perils (water leaks, fire, smoke damage, theft, etc.). If your home happens to be in one of our coastal counties you also had a separate hurricane deductible. In most cases, the wind and hail deductible has been 1% of the dwelling amount.
In 2013, a few insurance companies raised the wind / hail deductible on north Texas home insurance policies to either 1.5% or 2% of the amount of coverage on the home. This meant if a home is insured for $200,000, then the homeowner would have a deductible of $3,000 or $4,000 instead of the normal 1% deductible of $2,000.
Roof Age: A roof’s age has impacted the rate a homeowner pays for home insurance for the past 10 years. Many carriers provide a discount for roofs that are 10 years old and newer. As roofs become older, home insurance companies are evaluating how they will extend coverage.
I know of one company that automatically raises the deductible to 1.5% if the roof is older than 9 years old. In addition, I’m aware of one company which is contemplating shifting to actual cash value coverage on roofs over 15 years old, and another that refuses to write the home insurance if the roof is this old.
In either case, I recommend home owners consider replace the roof once it’s 20 years old, especially if it’s a composition or wood shingle roof. As long as insurance companies are deciding whether to shift more of the burden to replace hail damaged roofs to the home owner or charge more for their home insurance, having a newer roof is to the home owner’s advantage. In addition, there are several steps Texas home owners should take.
- Confirm with your agent if there are any policy coverage or deductible changes when your policy renews.
- Compare rates with other companies if your coverage is changing. I actively review each client’s renewal for policy changes and savings.
- If you have the cash and the roof needs to be replaced, replace it. There’s really no such thing as a “free roof.”
- Set aside funds in savings to pay the deductible if you do experience hail damage.
- If you’re buying a home, it is imperative to find out when the roof was last replaced.
I don’t think this issue is going to change, unless the weather patterns in Texas begin to cooperate or our population growth begins to slow. What do you think insurance companies should do? Share your suggestions or questions with us on our Google + and Facebook pages. I’d love to hear from you!