Understand Insurance Payouts for Roofs
Understand Insurance Payouts for Roofs
By Dereck Kartchner | Gila Insurance
Let’s start with the good news: the insurance market is stabilizing. Many carriers are lowering rates incrementally, but it’s happening. However, inflation has had a big impact, and companies are slow to return to the aggressive pricing of the “good ol’ days.” So, while rates are decreasing, insurers are also introducing new limitations. One of the biggest changes involves how they handle roof claims, particularly for wind and hail damage. Roof-related losses are among the most frequent and costly claims, and carriers are adopting strategies to limit their exposure and share costs with policyholders.
You might expect to see this trend only in tornado or hail-prone states like Oklahoma or Colorado, but it’s happening in Arizona as well. Insurers increasingly view many roof claims as maintenance issues rather than true losses. While this perspective is debatable, it’s driving major changes in coverage. Here are some of the common approaches carriers are now using:
A common strategy is to increase deductibles for wind and hail claims. Higher deductibles shift more costs onto policyholders, discouraging small claims and lowering insurer payout frequency. The most common setup is a 1% or 2% deductible. On a $400,000 home, that would be $4,000 to $8,000—considerably higher than standard deductibles of $1,000 or $2,500.
Some carriers now use roof payment schedules. Instead of covering full replacement costs, reimbursement decreases as the roof ages, accounting for depreciation. For example, a policy may start at 100% payout for a new roof but shrink to just 57% after 10 years.
Other insurers only write policies for homes with newer roofs, sometimes requiring that roofs be replaced within the last five years. While some companies will still insure older roofs (usually applying other restrictions), this trend limits consumer options.
Another growing practice is actual cash value (ACV) settlements after 15 years. Under this method, insurers only pay for the depreciated value of the roof rather than full replacement cost. For example, if a 20-year asphalt shingle roof costs $10,000 to replace, after year 15 the payout may only reflect 25% of its value—about $2,500 minus the deductible.
Some companies apply just one of these methods, while others use multiple simultaneously. The bottom line is that homeowners need to understand which of these rules apply to their policies. These changes mark a clear industry shift toward cost-sharing in the face of rising replacement expenses and increased weather volatility.