How does a roof replacement paid by insurance work?
Short answer. The insurer pays the cost of the covered roof damage minus your deductible, usually in two checks: an actual cash value payment first, then the withheld depreciation after the roof is replaced, if your policy pays replacement cost. You pay your deductible to the roofer, and if you have a mortgage, the lender is often named on the checks.
The money, step by step
- Estimate. The adjuster prices the roof line by line in estimating software: tear-off, shingles, underlayment, drip edge, starter, ridge cap, flashing and vents.
- First check. Replacement cost value minus depreciation minus your deductible. This is the actual cash value payment.
- Work begins. Your roofer is paid from that check plus your deductible, on the schedule in your contract.
- Second check. After completion, the roofer's final invoice goes to the insurer, which releases the recoverable depreciation. Approved supplements for items the first estimate missed are paid the same way.
A simple example
Say the estimate is $14,000 replacement cost, with $4,000 of depreciation and a $1,500 deductible. The first check is $8,500. After the roof is finished and invoiced, the insurer releases the $4,000. You pay the $1,500 deductible, and the roofer receives $14,000 in total.
Where it slows down
- Mortgage company on the check. The lender may need to endorse it, or hold the money and release it in draws. See mortgage company insurance checks.
- Actual cash value roofs and payment schedules. No second roof check comes, so the gap is yours.
- Upgrades. A different material or extras you choose are paid by you, outside the claim.
Your deductible cannot be waived, discounted or rebated by the roofer. In Georgia that is illegal, and the final invoice should show the true price.