If your roofer's estimate is higher than your insurance claim amount,
the best thing that you can do, intuitively might sound
like the worst thing you could do.
Hi everybody this is Tracy Bookman owner of Homestead Roofing and welcome to
today's walk in the park video where we take
just a few minutes to answer your questions about roof repairs,
roof replacements, and the insurance claim process. Today we're going to
answer kind of a complicated question
and it has to do with signing a contract. If your roofer's
estimate is higher than your insurance claim amount,
your roofer may ask you to sign a contract
for that amount. Well intuitively, you might be thinking, well that doesn't
sound like a very smart idea, because what if the insurance company
doesn't match the roofer's estimate and am I going to have to pay for the
difference out of pocket? We're going to address that particular
question, but we're also going to talk about
specifically, why it's actually in your best interest
to sign the contract even if the amount is
higher than your insurance claim amount. First of all, let's look at it from your
insurance company's point of view, because
that's actually the most important perspective on this.
Why is it that your insurance company would appreciate getting a contract from
you even if that contract amount is higher
than their claim amount? So look at it this way, let's say an,
let's say a homeowner, maybe an unscrupulous homeowner
sends an estimate to an insurance company
and it's for X amount and let's say X amount
is higher than the insurance claim amount,
and all that the insurance company has received is just an
estimate. Well what does that tell the insurance company? The,
it, all that's communicating to the to the claim rep and to the insurance
company, is that somebody has given you, the
homeowner, an estimate for X amount. The insurance
company sees no commitment on your part or
on the part of the roofing contractor to actually do the work
for that specified amount. In their mind, what could be the potential
if they increase their claim amount to match the amount on that estimate,
there's a possibility, like I said, if it's an unscrupulous homeowner,
and they do exist, that the homeowner then will, will either hire that roofing
company to do the roof for less
than his estimate is, or he'll, he'll have basically gamed that roofing
contractor, asked him to give him an estimate, the
roofing contractor spent all the time and money
to give him the estimate, the insurance company
raised their claim amount, and then the homeowner
went and hired a different roofer who would do it for
less than that amount. So from your insurance company's perspective,
if you or your roofing contractor send in a signed contract, that
demonstrates to your insurance company that you as
their client are acting in good faith, and you're not trying to commit
insurance fraud, because the contract is stating
that the work is going to be done for that specified amount. Now in Colorado,
the law actually requires a roofing contract
to show the detail of the scope of work with a dollar amount. That prevents a
roofer from being able to tell you as the homeowner, I'll just do it for
whatever your insurance company pays. Well that's not legal in Colorado, the
contract that you enter into actually has to have a dollar amount on
it. Well, if the dollar amount happens to exactly
match what your insurance claim amount happens
to be, is that just coincidental or did the
roofing contractor just look at your insurance claim and
then just write that dollar amount on his estimate?
You've told us in previous videos to never
sign a contract up front. Yes, that's true. Here are the circumstances in which you
do not want to sign a contract, and that's
like when the guy knocks on your door, and says, hey, you mind if we check your
roof for damage? We're working at your neighbor's house
right over here, and he had lots of damage and
so, you know, I was on his roof and I could see that your roof is damaged, you
want me to get up there and check it? You know, you might think that I'm making
all that up, but that's kind of stuff that they say.
And you say, okay, yeah, go ahead check out my roof
and he says, all right well, we just need you to sign this,
or maybe you let the guy get up on your roof ,he gets up there
comes down and starts showing you a lot of photos of all the damage that you've
got up on your roof and he says, we'll take care of the
repairs we'll work with your insurance company,
we just need you to sign this. Well, is there a scope of work on that document?
Is there a dollar amount on that document that you're signing?
If not, don't sign it. Well now let's look at this from
the roofing contractor's perspective, if a roofing contractor
has invested the time to come out to your home,
do the inspection, meet with you, give you his evaluation,
and then you've asked him to create an estimate for you,
and he works on creating that estimate which costs him time, but it also costs
him money, because most of the time he's going to have paid to get
measurements of the home through aerial imagery,
and that's not a free service to the roofing contractor,
and then you're asking him to send the estimate to the insurance company,
contact the insurance company on your behalf,
ask if they've received your estimate, ask if they've,
asked if they accept his estimate and find out then are they going to increase
the claim amount, well there's a lot of administrative time and effort involved
in doing that, so, from the roofer's perspective it's
legitimate for him to expect for you to sign a contract
for him to go through all of that effort to do those things
for you the homeowner. Not only that, let's look at it from
the perspective of you the homeowner. You actually win in that situation too,
because as we've pointed out in several other videos, when you get your
insurance claim, right out of the box, most of the time
it's too low. But if your insurance claim is too low
right out of the box, that means that your insurance company isn't
actually indemnifying you for the full cost of what it's going to take to
replace your roof. So, all the components that are
on your roof need to be replaced and if they're
omitting things from the claim then you're losing.
So, if you're working with a roofing contractor who comes up with a scope
of work to replace like kind, and quality for you,
you're actually winning, because remember, it doesn't cost you,
the homeowner, anything extra. So, if your roofing contractor's estimate is higher
than your insurance claim amount, then your insurance company should
adjust their estimate to match the full replacement cost being charged
by your roofer so it doesn't cost you anything extra. So, now you might be
thinking, hey but isn't that kind of risky for me if I sign a contract
and it's for X number of dollars more than what my insurance claim amount is?
aren't I going to have to pay the difference? Well, remember,
if you have replacement cost value coverage
for your insurance, that means that your insurance company
will pay to replace like kind, and quality
as long, as long as your contractor or you
can demonstrate that the things that are being required to
do full replacement are necessary, reasonable, and fair.
If they're not necessarily, reasonable, or fair, your insurance company isn't
obligated to pay for them. But assuming that you have ordinance and
law coverage on your policy, and assuming that you have replacement
cost value coverage on your policy, if you
sign a contract for an amount that's higher than your
insurance claim, are you gonna have to pay for the
difference out of pocket? You've got to clear that up with your roofing
contractor before you sign. So, I hope this video has
been helpful for you, I know it's been a lot of information,
but if you've got any questions about this particular topic or other topics
please feel free to give us a call at our phone number right up here
719-433-6991 you can also visit our website that's
right down here homesteadroofingcolorado.com we've got a
ton of information out there lots of other educational videos for you.
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Until our next walk in the park video, I'm Tracy Bookman owner of Homestead
Roofing.