How a New Roof Can Help Lower Your Homeowners Insurance Cost for your Coastal Property
December 5, 2023 by Brad Davis, CIC (edited 2/15/2024)
Insurance companies are making drastic changes to their policies concerning roof guidelines and coverage, especially considering it has not really changed much for a long time. Frankly, it is getting harder to find Replacement Cost coverage (RCV) for roof damage if the roof is over 10-15 years old. When you do find RCV for an older roof, you are likely to pay more for it. This is especially true in Myrtle Beach and along the coast of the Carolinas.
The alternative is Actual Cash Value coverage (ACV) and sometimes this is the only option.
For an article with more information about RCV versus ACV you can read this from NAIC -> Rebuilding After a Storm: Know the Difference Between Replacement Cost and Actual Cash Value When It Comes to Your Roof (naic.org). Read your policy, as it could differ from other Home Insurance policies that look similar. If you have ACV coverage, be aware that you will possibly not like the settlement offered or given by the insurance company. It will probably be lower than you expected.
Let me go ahead and lay out some key points here.
- A new roof can lower your home insurance premium. (It can depend on the current age of your roof and other factors, but you may save 5% up to 30% or more by installing a new roof.)
- Let your insurance agent know once it has been replaced. (Perhaps even before in case you need Builder’s Risk coverage.)
- Keep proof that the roof has been replaced and send it to your insurance agent or the company if requested.
1. How will a new roof lower my Myrtle Beach Home Insurance costs?
There are a couple ways a new roof can help with your homeowner’s insurance.
Every company has their own set of guidelines when it comes to this. Right now (as of December 2023) some companies will not even write a new policy for a home over 2 years old. Others will not write a new policy if the roof is over 5 or 10 years. This narrows the field of insurance companies that agents and homeowners can use for insurance. If you take away half (or more) of the options, you are likely going to see a higher premium. This also puts a strain on the companies that are fully open, as they start to write more policies than they anticipated they have to raise rates or stop binding new policies for a while. This all creates less competition and has kind of a snowball effect.
Another way a new roof can lower your premium is based on the rate or a discount. A real quick lesson – rate and premium are not the same thing. The rate is basically how much you pay for every 100 or 1000 dollars of coverage. The premium is the total amount you pay after discounts and all. Some insurance companies offer lower rates for homes with new or newer roofs. Or it may be applied to the policy as a discount. Either way it pretty much does the same thing.
2. Make sure to let your agent or the company know of roof improvements.
The obvious reason is it may lower your premium – we just went over that. Your agent can see if will lower your current premium or see if it allows you to move to another company with a better premium or better terms. There is nearly a shortage of companies offering Homeowner’s Insurance in Myrtle Beach as it is, you want to have as many options as possible.
It also may increase the replacement coverage of your home and therefore you may need to increase the coverage amount for your home. If you replace your roof with the same type materials, it may not impact the coverage amount much if at all. But if you use more expensive materials, it definitely could.
Letting your agent know can also prompt a discussion about other coverages, such as maybe needing a Builder’s Risk policy during renovation or adding coverage for solar panels on your roof.
3. Keep proof that you had your roof replaced or repaired.
This could really be important if at the time of a claim the claim adjuster is questioning the age of the roof to apply coverage or even approve the claim. Go ahead and send it to your insurance agent so they can do what they need to do.
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Some additional tips to keep in mind regarding the roof on your home.
- Roofs in coastal areas really only last for 10-15 years. Insurance companies know once they are about that age it’s just a matter of time a hailstorm or something else causes damage.
- Use a local roofing contractor with a good reputation. It is tempting to hire the cheapest contractor, but you want one that will be there and come back if you have any issues.
- Keep your roof clean. A good annual spring cleaning can help extend the life of your roof.
- Trim overhanging trees or branches away from your roof. They can hold in moisture (causing algae, mildew, etc.), fall on your roof, clog gutters with debris, and insurance companies don’t like it.
- Consider having it inspected every few years or so.
Why are new roofs so important to insurance companies for coastal home insurance?
Home insurance companies are still tightening their guidelines. A new roof is a great way to take care of your home and show a pride of ownership. That’s really what home insurance companies want to see, and that’s what will give you the most options when it comes to shopping for home insurance. Again, insurance companies know the risk of an older roof. Newer roofs are much better suited for coastal areas and to handle a hailstorm or hurricane.
If you ever have a question about your roof as it pertains to insurance, call your insurance agent. Certain types of roof materials can affect your insurance a little differently. For example, if you currently have 3-tab shingles and are looking to get a new roof, consider spending a little more for architectural shingles. They last longer, some insurance companies will accept older architecture shingles versus 3-tab, and in my opinion they look better. Roofing materials with higher wind ratings can sometimes lower your premium. Another example would be metal roofs – some insurance companies treat them a little different or may have an endorsement that excludes cosmetic only damage to metal roofs.
We know replacing a roof can be very expensive. I am not saying to go out and replace your roof right away, but I am trying to explain how important the condition or age of your roof can be.
*As always, the best thing you can do is to fully read your policy. Nothing in this blog post is intended to alter your policy at all.
Care to see what we can do for your home insurance? Please visit ThinkDavisInsurance.com or call (843) 213-0000.
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