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Why Getting 3 Roofing Bids Costs You Big Time!
Getting 3 Roofing Bids, Favors The Insurance Company, Not The Homeowner!
The way insurance claims are processed has changed over the last 5 - 15 years. It used to be that the insurance company would give the homeowner a check for the full amount of the loss and then the homeowner could bid out the job as they saw fit. If the amount of the job came in below the amount the insurance company paid, the homeowner could keep the difference.
Insurance companies now break the payments into a minimum of two checks, one for the Actual Cash Value (ACV) of the roof, and the second for the Depreciation (DEPR) of the roof. The insurance company is legally required to pay the homeowner the ACV portion of the claim in all circumstances. So, they will send a first check for the ACV portion of the claim. They are NOT required to pay the homeowner for the DEPR portion of the claim unless the work has been verified as completed. This means insurance companies now require an invoice showing the final balance of the work billed to the homeowner.
Why did they make this change?
Because a certain percentage of homeowners were using repair money to fund lifestyle choices, such as going to Vegas or getting a hot tub. This actually contributed to the 2008 housing crisis, as many banks suddenly discovered the houses they had lent on weren't worth what they thought they were because repairs had not been made.
Why Do Insurance Companies Tell Homeowners To Get Bids On Roof Replacement?
Insurance companies are the only ones to benefit from bidding out a roof seeking the lowest bid. Insurance companies hope that home and business owners will try to pocket some money from their claim, that way when they receive the final invoice, and they won't have to pay the full amount of the claim. The policyholder does not benefit and is usually hurt by this as they will typically receive a lower-quality roof, and no extra money in their pocket.
How Should I Select A Contractor If Bids Don't Matter?
* Reputation (Good reviews)
* Quality (Roof installation process, quality control system, good materials)
* Reliability (In business at least 5 years, will be around to service warranty)