Many insurance carriers are taking a very hard look at roofs due to all the roof claims that followed Hurricane Irma in 2017. Insurance carriers are not taking risks on “questionable roofs.”
As technology advances, so too has the inspection process for carriers. However, that does not necessarily result in greater efficiency with regards to generating accurate information. As COVID is still a hot issue, many companies are now using drones for inspections rather than sending a person onto the roof. This practice has led to some issues with inspectors claiming, “dirty roofs” look “beyond their useful life.”
When an inspection comes back poor, whether by a person or a drone, most carriers are providing a 60-day recommendation window to get a response from a professional roofing contractor. This recommendation is generally something along the lines of, “A licensed roofing contractor should inspect the roof coverings and advise whether the coverings require repair or replacement and determine their useful life remaining.” Inspectors then put forward a report with what they find on the roof, along with pictures, potential repairs, estimates, and what they believe the useful remaining life of the roof is.
A problem that is becoming more prevalent is when the roofing contractor does the inspection on what the association believes is a good working roof with 5+ years of warranty or life remaining, but the report comes back confirming it’s “beyond it’s useful life and should be replaced”. Once the determination is made by a roofing contractor that the roof is beyond it’s useful life, it is extremely difficult to find a carrier willing to write the deal.
The insurance marketplace has moved to a consistent view that roofs over 15 years are past their useful life from a cost standpoint at the very least. That is, at 15 years, some carriers will no longer cover at “Replacement Cost Valuation,” but rather “Actual Cash Value” which means roofs are looked at based on their depreciated value from a depreciation schedule.
Additionally, some carriers have moved away from “Actual Cash Value” and have decided that 15 years is a hard cut off for them with regards to writing new business, as the costs of litigation/fighting against public adjustors can often be 10-20% of the total claim amount. As carriers move away from writing the older roofs entirely, there are less carriers willing to write, and pricing is often not very competitive.
The insurance marketplace is changing rapidly, it’s critical that you are working closely with your agent as far out as possible on your renewal and review your policy options very carefully. If this more conservative view of older roofs continues to persist in the marketplace it may accelerate reserve funding and roof replacement schedules. We are continuing to monitor the marketplace, stay tuned to our blog for updates.
