Insurance Supplement

I have a question about my roofers and my insurance. We had hail damage to our roof, we had a roofing company come out and give us an estimate on fixing it we accepted their bid, they ask for a copy of our insurance papers we gave it to them. They replaced our roof, we paid them all was fine, then we received and additional check from our insurance company for a substantial about of money. It said it was for supplemental repairs, code upgrades and recoverable depreciation. Then the roofers call and said we sent in a supplemental claim to your insurance and we want the check. We are very confused there was no extra work done other than the original estimate. The only other thing that was discussed was an additional fee for hauling off the old roof, as we would not know how much that was until it was done. We feel like the roofing company is just taking advantage of our insurance company. And would like to know if this is normal? And do we just hand over the check? I called my claim adjuster and they basically said the claim is closed, do whatever you want with the money.

It is normal to uncover additional problems while performing the replacement. A common issue would be rotted plywood that needs replaced. They may not have spoken to you about if they knew insurance would be covering it. But the insurance would have wanted to see photos of the bad spots/other issues. They won’t often hand out money based on someone’s word.

You mentioned recoverable depreciation. This is probably the majority of that check. The insurance will only pay out a portion of the value of the roof in the first check. They will hold onto the rest until the work is actually completed.

There was no additional problems, no decking was replaced, it took them two days to replace our roof, and my husband sat in a lawn chair and watched them the whole time they were here, our house was built new in 2003, and we had replaced the roof ourselves in 2016 just because it needed to be replaced, this time was due to hail damage. And the recoverable depreciation should that go to us or the roofers?

Codes upgrades/supplementals could be anything from drip edge, ice shield, flashing, ridge vent. If it wasn’t on the old roof, some insurances won’t pay it out until “costs occured” meaning after that roof is done. This is standard practice and the insurance asks for proof that these things are done before paying. If you really want to see a breakdown of these items, both the insurance and roofer should have an itemized list.

For the recoverable depreciation. It depends on your contract but it usually goes to the roofer. Did you already pay the roofer in full, or did you just pay them the initial insurance check? Calculate what you paid out vs what you received from insurance. If the insurance covered everything, your only out-of-pocket cost should be your deductible. And you generally shouldn’t end up keeping money, unless you forwent repairing something.

There was no talk of our insurance money, they came and gave us a estimate for replacing our roof we accepted their bid, and ask when they could get started. Then they ask if they could see our insurance papers so they could be sure and replace what the insurance company paid for, like I said our roof and vents…etc, was only four years old. We said ok, if the insurance paid we would like it to be replaced. And they didn’t replace anything that wasn’t already on the roof. We didn’t add anything, no new vents or anything. The only this that was different was they said they would upgrade our felt to a new synthetic felt, and they told us that would be no cost to us since the new synthetic felt was all they used. We assumed that was in the price of their estimate. And yes we paid the roofer in full when he finished the job per our contract. We had no idea that anything further would be happening, until we received and additional check from the insurance. This whole thing seems a little shady to us, so we called our insurance company and like I said, they basically said the claim is closed. I am not trying to cheat anyone out of their money, but I would like to know everything is above board. At the end of the day it is my house, and I pay the premiums on my policy,which will probably go up because of all of this. I really appreciate your input!

And I’m not trying to argue I simply do understand why the recoverable depreciation should go to them? We had a 30 years shingle on our house, it was only 4 years old when the storm hit why would they get the depreciation?

Recoverable depreciation is just part of the roof payment. Insurance will put a value on your roof (eg $20k, replacement cost value). They will depreciate this value based on the age of the roof (eg $5k). This new value ($15k, actual cash value) they will send you in the first check. The rest ($5k, recoverable depreciation) they will send after the work is done.

There are two ways an insurance job can go:

  1. The roofer will review the paperwork up front and inspect the roof to make sure everything is covered. Roofer will discuss with insurance to get everything that’s needed covered/supplemented. Then all work on the paperwork is done. So the roofer will get the full amount (actual cash value + recoverable depreciation + supplementals).

  2. Roofer makes an independent estimate to you; doesn’t deal with the insurance at all. They bill you for the work done + any extras. You pay them directly. Then you talk to the insurance to get reimbursed. You keep the full amount from insurance.

It looks like your roofer is doing a blend of the two which just makes things confusing. In this case, since you already paid in full, you would keep the recoverable depreciation.

Your original insurance paperwork should list the recoverable depreciation amount. Deduct this from the latest insurance check and the difference will be the supplementals.

Ask your roofer for a breakdown of the supplemental repairs. If they made an independent estimate, it should have included everything needed to replace the roof (except hidden damage like plywood). If they did more work than their estimate, they should be speaking to you about it, not your insurance.

It sounds like your roofer may have underbid the job and is trying to make it up in supplementals. Was the estimate from the roofer less than the replacement cost value from insurance?

It was, but it really wasn’t much, it was like 260.00 less. Thank you so much for your information, it has been really helpful.

No worries, I’m glad I can help. My recommendation would be to speak to your roofer and see what the additional amount was for. At least to make sure you seperate the depreciation from the supplementals.

They may have done additional work, maybe not. Certain items can be hard to see, even if you are watching them. They may have supplemented stuff that was already included in their estimate but not the insurance quote. You may find yourself in a situation with money sitting on the table. Who gets it?

  • Contractor - If their contact is completed and paid out, and no additional work was done - that’s it. They shouldn’t be owed anything else.

  • You - The claim is to pay for the cost to replace the roof, no more. You shouldn’t be making a profit. Keeping the money in this situation would be considered insurance fraud.

  • Insurance - They are paying for the roof. If it comes out cheaper than estimated, the difference should be kept by insurance. But some companies, it’s not worth their trouble to get it back.

But speak to your roofer. Maybe they really did miss something in their estimate or miscalculated the size. They didn’t want to bill it to you, to honor their price, so tried the insurance. Sure, it’s their fault, but if they did a good job and the money is there, they should be paid fairly. Find something you all agree on.

You premium shouldn’t go up. In most states, insurance cannot legally raise your rates due to an “Act of God” such as hail. They can raise rates for an entire region, if a big storm rolls through with a lot of claims. But they can’t raise your individual premium because of your claim.

I have spoke with them and there was no additional work that was done, and I ask to see where the extra money went, which they could not show, because nothing else was done. But like you said we probably should not have gotten the money either. I talked to my insurance company and they don’t seem interested in my situation. I don’t know if the roofing company was just trying to pull a fast one, or if they just did not explain like they should of. But what I think would be fair it to just split it with them. They did do the paper work, and there should have been a hauling off the old roof fee. Do you think that would be fair?

Sorry, I didn’t see you replied. I would say splitting it would be fair, as long as you did speak to the insurance.

If he did all the work in the insurance quote, and was just cheaper than what they estimated, that’s not really a big deal. However, if he billed extra for things that weren’t done (like he claimed the roof was bigger) that could potentially be a problem in the future. If you have another claim and things don’t match. Unlikely but possible. But if you spoke to the insurance and they couldn’t be bothered to do anything, then I would say you did your due diligence.

It is not unusual for an insurance claim to be supplemented. In fact, it is a lot more usual with a contractor that is competent with insurance work. What I don’t understand is why they didn’t communicate better with you about the supplement efforts and process. And it’s not always about uncovering hidden damages. It’s because the insurance companies underpay most claims by around 40% of what should be paid if scoped correctly with the Xactimate software.

What’s the issue? Are you satisfied with the work they provided?

You should have had a contract. It should have specified an amount which would have been the amount the insurance approved for the roof replacement. Which would include the recoverable depreciation. If it was a good contract, it would have a statement about supplements. My contract most certainly does, in fact, it is covered in two different documents.

If they gave you a cash bid and didn’t have language stipulating otherwise, you owe them what was on the contract unless there was out of scope work. And shame on them if they didn’t come to you with a change order for the out of scope work. Sounds like a company with some questionable business practices or perhaps better said, incompetent ones.

If the IC sent out the money without anyone submitting an invoice, you do not have to send it back. You did nothing wrong. Now you’re left with figuring out how to fairly dispense the funds.