As a homeowner in Florida, protecting your home and its contents against damage and loss is essential. In the event of a covered loss, like damage to your roof, homeowner’s insurance is meant to protect you financially. When you get insurance for your roof, the replacement cost and the schedule for replacement may come up. In this blog, we’ll explore the differences between these two concepts and why they matter.
Dealing with roof damage can be a major headache for homeowners If the damage is covered, insurance can help pay for repairs or replacement. Farmers Insurance offers policyholders the choice between replacement cost and scheduled roof payments for roof claims But what exactly is a scheduled roof payment and how does it work? This article will explain Farmers’ scheduled roof payment option in detail.
Overview of Scheduled Roof Payments
With a scheduled roof payment structure, the insurance company agrees to pay a specified percentage of the total roof replacement cost in the event of a covered loss. The payment percentage is pre-determined based on factors like roof age and materials. Older roofs have lower payment percentages than newer ones.
The policyholder pays the difference between the scheduled payment and the full replacement cost It shifts some of the financial liability from insurer to homeowner but offers potential premium savings
How Farmers’ Scheduled Roof Payments Work
For homes insured under their Farmers Smart Plan policies, Farmers allows customers to choose scheduled roof payments instead of full replacement cost coverage for the roof. Here are key details on how it works:
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Applies only to physical damage to roof surface materials from covered causes of loss like hail or wind.
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Farmers uses a clear roof payment percentage chart based on roof age and type of material.
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Payment percentage for roofs older than 10 years is often less than 50% of replacement cost.
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The damaged roof must actually be replaced to receive the scheduled reimbursement.
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Additional costs like building code upgrades, contractor overhead/profit, are not included.
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Homeowner pays applicable deductible out of pocket before scheduled payment is applied.
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Multi-year policies may change payment percentage at renewal as roof ages.
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Poor maintenance may allow Farmers to adjust payment percentage downward.
What Factors Determine Scheduled Payment Percentages
Farmers uses several criteria to establish the scheduled roof payment percentage:
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Roof Surface Material – Common materials like asphalt shingles, tile, slate, metal all have their own payment schedule.
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Roof Age – The older the roof, the lower the replacement percentage Farmers will pay. Age is based on installation date.
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Estimated Useful Life – Longer lasting roof types like tile get higher payment percentages.
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Single or Multi-Year Policy – Payment percentage may decrease on renewal as roof ages another year.
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Actual Condition – Farmers may reduce payment if roof condition is worse than normal wear for its age.
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Geographic Location – Environmental factors like coastal conditions can impact useful life and warrant lower payments.
Scheduled Roof Payment Example
Here is an example of how it works:
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15-year old asphalt shingle roof sustains hail damage.
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Roofer estimates full replacement cost will be $15,000.
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Farmers Smart Plan policy has 20% hail damage deductible.
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Payment schedule shows 65% replacement for a 15-year old asphalt shingle roof.
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Farmers pays 65% of $15,000 = $9,750
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Minus 20% deductible applied to $15,000 = $3,000
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Net claim payment = $6,750
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Homeowner pays roofer the remaining $8,250 ($15,000 full cost minus $6,750 claim payment)
Potential Benefits of Scheduled Roof Payments
There are some advantages policyholders should consider:
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Lower Premiums – Insurers can reduce rates because their financial exposure is limited.
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Faster Claims – Avoid delays determining full replacement cost and depreciation.
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Flexible Timing – Homeowner controls when the roof is replaced rather than the insurer.
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Avoid Underinsurance – Shifts the risk for replacement cost shortfalls to policyholder.
Potential Drawbacks to Understand
But there are also some disadvantages to weigh:
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Increased Out-of-Pocket Costs – Homeowner must pay the difference between scheduled payment and full cost.
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Excluded Costs – Building code upgrades and contractor overhead/profit not covered.
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Older Roof Risks – Smaller scheduled payments on aged roofs mean more money needed from homeowner’s own funds.
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Condition Issues – Pre-existing damage can further reduce the scheduled payment percentage.
What Types of Roofs Qualify for Scheduled Payments?
Farmers’ scheduled roof payment option is available for policies covering:
- Asphalt or Fiberglass Shingles
- Concrete or Clay Tile
- Metal like Copper, Aluminum, Steel
- Slate Roofing
- Wood Shakes or Shingles
Key eligibility factors include:
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Roof must be in good condition, not deteriorated, when first insured.
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Old or high maintenance roofs may need inspection before qualifying.
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Unique historic or architectural roofs often require full replacement cost.
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Mixed material roofs have potential limitations.
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Flat roofing is not eligible for scheduled payments.
Can You Change Payment Options Mid-Policy?
For new policies, homeowners choose either replacement cost or scheduled payments for the roof. Changing between options mid-policy is restricted:
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At renewal, especially if roof has aged 5+ years since policy inception.
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If claims investigation finds the roof in worse condition than the age indicates.
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After weather events in the region impact roof underwriting standards.
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May require inspection confirming the roof condition merits a change.
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Primarily allowed when reducing premiums in exchange for reducing roof coverage.
Is Scheduled Roof Payment Right for You?
Scheduled roof payments reduce insurer costs and homeowner premiums. But the policyholder takes on more financial liability for full repairs. Consider:
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Your roof’s age, type, condition and remaining useful life.
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The scheduled payment percentage you would receive based on your roof’s specifics.
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Your budget – can you afford potentially high out-of-pocket costs?
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Whether premium savings outweigh higher potential repair costs.
For expensive premiums or newer roofs, replacement cost coverage may be the better option. But scheduled payments can benefit certain policyholders willing to share more replacement cost risk.
Farmers’ scheduled roof payment approach pays a pre-set percentage of repair or replacement costs based on roof details like age and materials. It caps insurer exposure but shifts some financial risk to the homeowner. Understanding exactly how it works allows you to determine if it is the right option for your situation.
Frequently Asked Questions
What happens if the scheduled payment doesn’t cover the full cost?
The homeowner is responsible for paying any shortfall between the scheduled payment amount and the actual full replacement cost.
Do you have to replace the roof to get the scheduled payment?
Yes, Farmers requires the roof to be fully replaced in order to receive the scheduled payment amount.
Can you switch from scheduled payment to full replacement cost later?
It is very difficult to switch from scheduled roof payments to full replacement cost outside of a policy renewal. Farmers restricts mid-term coverage changes.
Does Farmers offer scheduled payments in all states?
No, scheduled roof payment options are only available in certain states where Farmers Insurance operates. Availability depends on state insurance regulations.
What if the roof has pre-existing damage or poor maintenance?
Pre-existing issues like deferred maintenance may allow Farmers to reduce the payment percentage, leaving the homeowner with higher out-of-pocket costs. Proper roof care is advised.
How Does the Roof Payment Schedule Work?
The payments for the roof are based on a sliding scale, where the amount paid goes down as the roof ages. Here’s a simplified example of how it might work:
- Roof Age 0-5 years: 100% of the replacement cost
- Roof Age 6-10 years: 80% of the replacement cost
- Roof Age 11-15 years: 60% of the replacement cost
- Roof Age 16-20 years: 40% of the replacement cost
- Roof Age 21+ years: 20% of the replacement cost
These percentages and age brackets can vary significantly between insurance providers and policies. It’s important to know that as your roof ages, your insurance company will pay less for repairs. Sometimes, a policy won’t cover a roof that is more than a certain age, usually 20 to 25 years old.
When you buy homeowner’s insurance in Florida, your company may ask for an inspection of your roof to find out how old it is, what kind of shape it’s in, and if it’s been fixed or replaced before. Based on this information, the insurance company may adjust the premium or coverage limits for your policy.
The roof replacement schedule typically includes the following information:
- The type of roof and its expected lifespan
- The date the roof was installed or last replaced
- Any repairs or replacements that have been done to the roof in the past
- How much it’s thought to cost to replace, taking inflation and other factors into account
Using this information, the insurance company will determine what portion of the cost of replacement they will cover. This part is usually changed once a year to account for the roof’s extra wear and tear as it ages.
Replacement Cost for Roofs
Replacement cost coverage is a type of insurance policy that provides coverage for the full cost of replacing damaged or destroyed property with new items of similar kind and quality. This means that if your home or personal property is damaged or destroyed, the insurance company will pay to replace it with new items, without deducting for depreciation. Replacement cost coverage is often preferred by homeowners because it provides more comprehensive protection than actual cash value (ACV) coverage, which takes depreciation into account and may not fully cover the cost of replacement.
Most of the time, replacement cost coverage for your roof will pay for the full cost of fixing or replacing it, less any deductible you choose. But this coverage might have some limits, like not covering certain types of damage or a maximum amount that will be paid out.
This coverage says that if your roof gets damaged, your insurance company will pay to replace it with materials that are the same quality and work the same way as the old roof. This includes the cost of labor and any necessary permits or inspections.
It’s important to know that replacement cost coverage costs more than actual cash value coverage. Actual cash value coverage takes into account how much your roof has lost in value over time. But replacement cost coverage can give you more peace of mind and protect your finances in case your roof gets damaged or lost in a big way.
If you buy replacement cost coverage for your roof, your insurance company may want to see an appraisal or inspection of your roof to find out how it looks and how much it’s worth. It is also important to check your policy to make sure that the limits of coverage are high enough to cover the full cost of replacing your roof in case of a loss.
A roof payment schedule is one way that some insurance companies figure out how much to pay for roof damage claims. A roof payment schedule is different from Actual Cash Value or Replacement Cost settlements because it figures out how much to pay you based on how old and damaged your roof was at the time of the damage. This approach aims to balance the insurance company’s risk with the homeowner’s need for coverage.