Home Insurance Carriers Cut Their Losses

By S.E. Slack

Looked at your homeowners policy recently? You should. There is a new trend in homeowner policy deductibles that could create a serious dent in your bank account if you ever need to repair wind, hail or similar damage to your home or roof.

For decades, homeowners chose one deductible for their home – usually in the $250 to $500 dollar range. Recent changes to many policies, however, require a separate deductible for damage to your roof caused by wind or hail. Since that covers almost anything that could happen to your roof (say a tree falls in high winds and puts a nice hole in your ceiling), this separate deductible is catching many homeowners, who make up 59 percent of the Philadelphia real estate market, by surprise.

For example, State Farm customers living in certain areas are subject to a five percent hurricane deductible. Five percent of $200,000 in coverage results in a $10,000 deductible. Other large insurance companies, such as Farmers and Allstate, have followed suit in hurricane-prone areas. Even inland cities can be subject to tricky deductibles like this.

“Certain carriers have also started a depreciation value related to the age of your roof,” says George Diver, personal lines director for Associates Insurance Group. “Homeowners with this type of insurance will find the cost to replace a roof more and more expensive as the years tick by.”

Here’s an example: A homeowners policy from The Hartford comes with a $1,000 deductible. But that deductible is actually tacked on to an odd depreciation program that applies when your roof is damaged. The value of your roof would actually be depreciated by 3 percent annually; then your $1,000 deductible would be added to that depreciated amount. So, a 10-year-old roof would be depreciated by 30 percent – and that amount would be tacked onto your reasonable $1,000 deductible. If it takes $15,000 to repair or replace your roof, you would shell out $5,500 before the policy helps you out.

Some companies, however, still offer flat deductibles for damage to your home. Safeco, for instance, offers a homeowners policy with a single, $1,000 deductible that applies to roof damage.

If you don’t have a wide open wallet to pay for unexpected, high-dollar damages to your home, call your insurance agent now to confirm your roofing and wind/hail deductibles. A few minutes now could save your big bucks down the road.

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