Working With Your Insurer and Your Contractor on a Storm Claim

Replacement cost or actual cash value

The Texas Department of Insurance explains the difference plainly: most home policies pay to repair or rebuild at current costs, which is replacement cost coverage, while some pay less based on the age and condition of the home, which is actual cash value coverage. Actual cash value policies cost less and pay less.

TDI's worked example makes the gap concrete. On a $200,000 house with a 2% ($4,000) deductible and a $10,000 roof replacement, a replacement cost policy pays $6,000 whatever the roof's age. An actual cash value policy pays $4,500 on a 5-year-old roof, $3,000 on a 10-year-old roof and nothing on a 20-year-old roof, because the depreciated value of that roof no longer exceeds the deductible.

Even with replacement cost coverage, the money often arrives in two parts. TDI's storm claim FAQ says the first check will likely be for actual cash value, and the rest follows once you have started repairs and shown proof. If you have a mortgage, the check may go to the lender first; TDI says the mortgage company must contact you within 10 days of receiving it and send the money within 10 days after you meet its requirements.

Your deductible is yours to pay

Several states make this a matter of law, not just policy language:

• Texas. A person insured under a property policy must pay any deductible on a first-party claim, and an insurer with replacement cost coverage may withhold recoverable depreciation until it sees reasonable proof you paid, such as a canceled check or credit card statement (Insurance Code ch. 707). A seller who pays, waives or rebates the deductible without the insurer's consent commits an offense (Business and Commerce Code 27.02).
• Colorado. A roofer may not advertise or promise to pay, waive or rebate a deductible, and if it does, the insurer is not obligated to consider that roofer's estimate (C.R.S. 6-22-105).
• Illinois. Contractors may not advertise or promise to pay or rebate any part of a deductible, and the ban covers allowances and discounts against the fee (815 ILCS 513/18).

A "free roof" pitch that absorbs your deductible is, in these states, an offer to break the law, and in Texas it can also hold up your depreciation payment.

Where the contractor's role ends

A contractor can document damage and explain the scope of work. Adjusting your claim is a different, regulated job. Texas bars a contractor from acting as a public adjuster, or advertising to adjust claims, on any property where it is or may be providing contracting services, even with a power of attorney (Insurance Code 4102.163). Colorado says a roofer soliciting work may not claim to be or act as a public adjuster, though a roofer with a signed contract may discuss the scope of repairs with the insurer.

The FTC's storm guidance adds a practical rule: do not rely on a contractor to tell you what is covered, and never sign your insurance check over to one. It suggests arranging a Certificate of Completion with your bank or credit union instead, so the bank pays for each stage after you approve it.

If you hire a public adjuster

Under Texas law, a public adjuster is paid to act on behalf of the insured in negotiating or settling a property claim. In Texas, one must hold a license from the insurance commissioner, the total commission may not exceed 10% of the settlement, and the adjuster may not take part in repairing the property on a claim it adjusts (Insurance Code ch. 4102). Ask your own state insurance department what rules apply where you live.

Assignment of benefits: Florida's reform

An assignment of benefits transfers your post-loss insurance benefits to someone else, often the contractor doing the work. Florida's Legislature ended that for new policies in 2022's Special Session A: SB 2-A, approved December 16, 2022, prohibits assigning post-loss benefits under any residential or commercial property insurance policy issued on or after January 1, 2023, according to the Senate's bill analysis. Outside Florida, read any document that transfers your claim, or your insurance proceeds, before you sign it.

Before and after the adjuster visits

TDI says it is generally fine to make temporary repairs, that your policy should pay for the materials and labor, and that you should photograph the damage first and hold off on permanent repairs until you have talked to your insurer. The National Roofing Directory covers the rest in its guides to the roof insurance claim process, documenting roof damage for a claim and why roof claims get denied.

Frequently asked questions

Why was my first claim check lower than the repair estimate?

With replacement cost coverage, insurers often pay actual cash value first and the withheld depreciation after repairs begin and you show proof, according to TDI. In Texas, the insurer may also wait for proof that you paid your deductible.

Can my roofer negotiate my claim with the insurance company?

A roofer can document damage and, in Colorado, discuss the scope of repairs with your insurer once you have signed a contract. Texas and Colorado both bar contractors from acting as public adjusters on jobs they are doing.

Can I sign my insurance claim over to my contractor?

In Florida, not under a residential or commercial property policy issued on or after January 1, 2023. Elsewhere it may be legal, but the FTC advises never signing your insurance check over to a contractor.