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Insurance payment for roof damage minus deductible and depreciation?
I have a home repair company that says it is a practice that insurance companies normally give you only a partial check and will not only issue you a check minus the deductible and depreciation but will also send you another check to cover the costs of a company to repair the entire weather damaged roof. He says that is common for insurance companies because they hope you will either not get the work done or will fail to ask for more. He says he will talk to them and the insurance company will issue a check for the full repair job. Is this a common practice of insurance companies or a scam by this home repair company?
3 Answers
- Someone ElseLv 78 years agoFavorite Answer
There is no “depreciation” taken on claims for the dwelling. The insurance company will pay the full amount of the cost to replace the roof (assuming the cost complies with the industry standards for that area), minus the deductible.
However, the insurance company only pays the full amount if the roof is actually repaired/replaced. Until the work is actually done, they will pay ACV – actual cash value, and they pay that up front to the insured. And then typically, your roofer will have you sign a “direction to pay” document in which you instruct your insurance company to pay the balance due directly to the roofer. Then the roofer sends the documentation and “direction to pay” to the insurance company.
It is not a scam. It is a standard provision in most insurance policies.
- AnonymousLv 78 years ago
It's a standard "condition" in every insurance policy, that you don't get REPLACEMENT value, until the item has actually been replaced - and this is just in case, you decide to NOT replace the item. It's been like this for decades. AFTER the roof is replaced, they'll mail you the "recoverable depreciation" amount.
He's wrong about the WHY, though - the POINT of insurance, is to put in you the SAME position - not a better one - as before the loss.
What he's offering to do, is have you sign a "direction of payment", and AFTER the repairs are done, they will pay him. He's not offering to speed up the claims settlement process - he's trying to guaranteed that he'll get paid.
- StephenWeinsteinLv 78 years ago
It's a scam.
The most that they will pay, the total of all the checks, will still be minus the deductible. It will never, ever be the full repair/replacement cost, no matter how many times you ask.
