Should I Show My Roofer the Insurance Estimate?
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Disadvantages to Not Revealing the Insurance Estimate to the Roofer
Trust is the hurdle to overcome here, and I totally understand not showing the insurance estimate to just any roofing contractor. Having some conversations can really uncover the professionalism of the contractor and how situations get handled.
The complexity of the project is where a homeowner can really be at a disadvantage when not showing the estimate. I’ve walked into situations that have been on going for just under two years which happens to be the completion deadline with many insurance companies. I wondered why the job wasn’t completed and soon found out. Withholding the estimate added to this issue because of the many things happening on the project. I did not know what the insurance company was covering and what they weren’t! After reaching out to the adjuster they too even became frustrated and understood the situation. The homeowner was trying to get the work done for the initial payment or Actual Cash Value (ACV) and didn’t understand the depreciation or final payment was waiting on a contractor’s completion of the project. To clarify only a small percentage of the payment was issued on a large project. Any contractor looking at the project and submitted an estimate was considered way over budget according to the assumed amount. After gaining the whole picture the insurance company was more than fair with the entire project. The only way I could gain any scope of the project was actually seeing the insurance estimate. There was a definite disadvantage not showing the insurance estimate that limited the homeowner from fixing what was damaged for almost two years.
By not showing the insurance estimate many people think there is an opportunity to make money in the case of an insurance claim. It just doesn’t work that way unless fraud happens. It’s not everyday but it does happen. I’ve had potential customers tell me to raise my bid to meet insurance and offer to pay cash on a lesser estimate. “Potential customers” the important phrase here. I walked away.
To really simplify the process and show why showing the estimate does or doesn’t matter is this:
The insurance allows $10,000 for the roof. The initial payment or ACV is the Actual Cash Value. Look at the roof as used and this is the current price. Maybe $5000 is the first ACV payment: the roof is 1/2 used or 15 years old. The deductible of $1000 is pulled from that $5000. The cost of the claim or deductible is meant to eliminate frivolous claims. A check for $4000 can be cashed and used for the roofing portion. With an invoice from a licensed contractor stating $10,000 when the roof is complete, the insurance will send the final payment of $5000 which is called the depreciation. The claim was $1000 short or your deductible.
Using the insurance estimate numbers of $10,000 again. If a contractor estimates $7000 to replace your roof the insurance company will request an invoice and pay an additional $2000 along with the $4000 above making it $6000 total. $1000 short again being the deductible.
If my estimate exceeds the insurance the adjuster will want to know why. If my explanation is reasonable, the same process happens.
Let’s say I estimated $12,000 and it was approved. $4000 was the initial payment and just to mix things up my estimate ended up at $11,000 less material and less labor was required. My final invoice was submitted for $11,000. $6000 will be the final payment or $1000 less than whatever is estimated.
To get a little more in depth here is article that discusses insurance payments and paperwork Insurance Claim with My Roof. Now What?
Advantages to not showing the Insurance Estimate to the Roofer
Advantages to not showing the insurance document splits to two categories.
Privacy and Trust with the Contractor
Protecting the Insurance Company
When keeping the estimate private, the insured is really testing the honesty of the contractor. The homeowner has the benchmark of roofing prices at their disposal in their area with the insurance estimate. The insurance document is very accurate because it can be derived from satellite imagery or an adjuster that measures properties all day long. The insurance document is often more detailed than a roofers estimate.
The second advantage to not showing the insurance estimate is protecting the insurance company. Protecting the insurance company is a down stream effect. Smaller scale mutual companies are affected by this much more than the larger insurance companies. For instance take a Minnesota mutual company comparing to a nationwide company. Rate increases are directly related to claims. The pool is smaller in Minnesota and rates can increase much more rapidly with a high frequency of claims than with a larger nationwide pool.
Here’s a general example of what happens when the estimate from the roofer is lower than the insurance.
Make sure you understand the estimate! Actual Cash Value and Replacement Cost are the numbers to focus on. Discuss this with your insurance agent or I have explained how this works many times without seeing any private information.
The insurance estimate allowed $12,500 to replace the roof. My estimate comes in at $11,000. The misconception can be that $1500 goes in your pocket. Not the case. The insurance gave you the first check or the ACV to get the project started and to be used as a down payment. After completion the my invoice will get submitted to the insurance company or directly to the adjuster who then releases the remainder minus the deductible. In this case $1500 was the difference which saved the insurance company money.
There’s a happy medium here as well. The $12,500 is an average rate. When the numbers dip too low or exceed it should be questioned. There are reasons for both. If the numbers are very low. Maybe something important is missing. The real cost of a cheap roof If the numbers are high a roofing company may have found some extras that are needed or just taking advantage of the insurance proceeds.
The insurance company has average rates for an area. Minnesota based companies are gathering install information constantly from roofing companies like Rooftop Solutions.
Hopefully you now understand advantages and disadvantages to showing the insurance estimate to your roofer
Trust is pretty important when working with any contractor. Covering these advantages and disadvantages is essential for any homeowner navigating an insurance claim with their property. Talking to Rooftop Solutions can help with your project if you choose either direction with your insurance estimate.
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