How does paying for a roof replacement through insurance work?
Short answer. When insurance pays for a roof replacement, the money usually arrives in stages: a first check for the actual cash value minus your deductible, supplement payments for items added later, and the recoverable depreciation after the work is done. You pay the roofer from those checks plus your own deductible, following the payment terms in your contract.
A typical payment sequence
- First check from the insurer, often with your mortgage company as a payee.
- Endorsement by you and the lender. See mortgage company checks.
- Payment to the roofer when materials are ordered or at installation, as the contract states.
- Installation.
- Final invoice sent to the insurer to release depreciation. See recoverable depreciation.
- Final payment to the roofer: the depreciation check, any supplement payments, and your deductible.
Example
Replacement cost $15,000, depreciation $4,000, deductible $1,500. The first check is $9,500, the depreciation check after completion is $4,000, and your share is $1,500. The roofer is paid $15,000 in total from those three sources.
Protect yourself
- Do not pay the full amount before work starts.
- Get a contract that states how insurance payments and your deductible apply.
- Read any assignment of benefits carefully. In Georgia, a contractor taking an assignment of your insurance proceeds within one year of a declared natural disaster is an unfair practice. See assignment of benefits.
- No contractor may waive or rebate your deductible.
Upgrades and extras
If you choose upgraded shingles or extra work the claim does not cover, you pay that difference directly; it is not part of the insurance payment.