Understanding the New Changes to Roof Coverage on Home Insurance 

Apr 17, 2024

In the realm of home insurance, few aspects are as crucial as roof coverage. The roof is not only a fundamental component of a house’s structure but also provides protection against the elements. Recently, there have been significant changes in how insurance companies approach roof coverage, impacting homeowners across the board. 

The Shift in Roof Coverage 

Historically, many home insurance policies covered roof damage caused by perils such as fire, windstorms, hail, and falling objects. However, as severe weather events become more frequent and costly, insurance companies have adjusted their policies to mitigate risks and maintain financial stability. Consequently, insurance companies have implemented changes that affect how they handle roof claims. 

Statistical Costs Changes Since 2020 (National Avg): 

Residential building costs: +27.7% 

Construction Labor Costs: +11.8% 

Catastrophe Losses (majority from wind/hail): up 212% 

*Example: 2019 had $50 billion vs. $165 billion in 2022! 

Key Changes to Note 

Age of the Roof: One notable change is the consideration of a roof’s age when assessing coverage eligibility. On average, roofs that are 12 years old or more may receive less favorable coverage terms or be very limited in finding an insurance company to offer them a homeowners policy at all. 

Actual Cash Value vs. Replacement Cost: Another significant change revolves around the valuation method for roof damage. Some policies now offer coverage based on the roof’s actual cash value (ACV) rather than its replacement cost. ACV considers depreciation, which

means homeowners may receive a payout that reflects the roof’s depreciated value rather than the cost of a new roof. 

Implications for Homeowners 

These changes in roof coverage have several implications for homeowners: 

Increased Responsibility: Homeowners may bear more responsibility for maintaining their roofs to meet insurance standards. Regular inspections, prompt repairs, and documentation of maintenance activities could become essential for maintaining coverage eligibility. One major issue for NWA homeowners is tree overhang on your roof. 

Potential Cost Considerations: Depending on policy changes, homeowners might face higher premiums or out-of-pocket expenses for roof repairs or replacements. Investing in a high-quality roof and preventive maintenance could mitigate long-term costs. 

What can you do as a property owner? 

Have a local independent agency review your policies! 

Given the evolving landscape of insurance coverage, homeowners should regularly review their policies and understand any updates or changes related to roof coverage. Consulting with insurance agents or professionals can provide clarity on coverage options and potential gaps.