Welcome to Homestead Roofing's "Walk In The Park" new series where we spend 3 - 4 minutes answering your commonly asked questions about roofing repairs or replacements and the insurance claim process.
This week, we answer your question, "Who do I pay my insurance deductible to?"
Many people get really confused about this because, when it's time the pay the contractor, he asks for payment for the entire cost of the project, and that's when homeowners can get confused because they think they already paid the deductible to the insurance company because the insurance company didn't give them the deductible money. This makes it feel like they're getting charged for the deductible twice: once from the insurance company and once from the contractor. To help you understand this, there are 4 terms you need to be familiar with: Replacement Cost Value, Depreciation, Actual Cash Value, and Deductible.
The total claim amount ($10,000 in this example) is your Replacement Cost Value (RCV).
The Depreciation is the amount of money the insurance company withholds based on the age of the roof or property that was damaged. If the roof is 50% through it's expected life, the Depreciation amount would be 50% (or $5000 in this example).
The Actual Cash Value is the amount of the check you receive to get your job started. If you have a Replacement Cost Value policy, you will receive the Depreciation at the end of the job when you or your contractor send in the final invoice showing the job cost of $10,000. The Actual Cash Value amount is the RCV amount, minus your Depreciation, and minus your Deductible.
The Deductible is the amount that your insurance company requires you to pay towards the cost of the repairs to your property. Therefore, if you have a $1000 deductible and a $10,000 claim, your insurance company will pay $9000 and you will pay $1000.
The reason for this feeling of getting "double charged" is because many people wrongly think that they "paid" their deductible to the insurance company because the insurance company didn't send them that money. Then when the contractor asks to be paid that amount, the homeowner feels like he's paying it twice, but he actually isn't. The insurance company is only liable for their share, and you're liable for your share.
Watch the videalk with us through Homestead Ranch Regional Park for a few minutes and learn how the deductible works and who it gets paid to.
Visit the Homestead Roofing website for a lot more information, education, scam alerts, and tips at https://homesteadroofingcolorado.com or call our office at 719-433-6991 if you have any questions about this, or any other roofing-related topics.