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Question DetailsAsked on 6/26/2016

In 2010 I filed a claim for hail damage. My deductible was 11000 which I did not know and they paid nothing. So now

it has happened again. WILL THEY PAY ME THIS TIME

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1 Answer


Short answer - most likely not, but maybe. Details below:

Not unless the covered portion (their loss appraisal or "adjusted claim amount") of repair cost is over your deductible amount, assuming the previous damage was repaired (for that $ amount, hopefully a full roof shingle replacement was done at that time).

If previous damage was NOT repaired then they will take the previous adjusted claim amount and deduct it from the value of the itemn, on the premise that the existing roof had decreased in value by that amount in the previous storm or possibly even had no remaining value due to the damage, so the adjusted claim amount can be as low as zero on a previously damaged but unrepaired/unreplaced item. People who get a cash settlement on car damage (say body damage) and don't get it fixed find this out thge hard way sometimes - the value of the car in any future claim is decreased by the amount that was paid out for the prior damage PLUS the deductible (the two adding up to the presumed value of the damage), which can reduce the "book value" of the car so low that even relatively minor subsequent damage can be considered a "total loss" - wiping out the remaining value of the car, meaning they will pay only the remaining book value of the car at that date and number of miles on the car MINUS the previous payout MINUS your deductible - in some cases "totalling" the car (which then goes on the title as a scrapped car and makes it unregisterable whether you like it or not) even if the damage is moderate and readily fixable.

In essentially all property insurance contracts your deductible is applied PER CLAIM (read your contract, but almost certainly so on residential contracts at least) as opposed to per-policy-year deductibles like on health insurance - so $11,000 out-of-pocket for you up front (if you did not change the deductible amount) for each and every separate claim. So - until the allowed or "adjusted" amount of repair/replacement exceeds at least $11,000, you pay everything. That is a pretty high deducible - commonly you only see that high a number on specialty coverage like flooding and earthquake and high-value jewelry and collectibles coverage, something in the $500-2500 range is more common for homeowner's insurance policies (%500 commonly minimum available and probably most commonly taken by homeowners), but you may have opted for the minimum premium and are now paying the price. Going from a $500 to $2500 or $5000 deductible can commonly save 20-40% in premiums, and by increasing your deductible to $5000-10,000 or $25,000 (depending on company) you can save up to 50% or more on premiums. (Since you had an $11,000 deductible, that is an odd number so I would guess your deductible is a percentage of total home valuation rather than fixed $ amount - some states allow this as an option, and as I recall that is standard in Texas and maybe other states).

A common rules of thumb that does not have hard mathematical basis but is commonly referred to - take the change in deductible and divide by 2.5 - if the premium decrease is more than that amount it makes sense assuming you can afford the higher out-of-pocket risk for the higher deductible in the event of a loss. If the premium decrease is less than that amount probably not a good deal to make the change. Of course, this is based on nationwide claims averages - what your particular experience will be is luck of the draw or dependent on your personal claims experience.

There are also two types of common insurance - replacement value, meaning they handle damaged items either by repair to same condition or by replacement with new without accounting for the age of the item; or depreciated or amortized or "cash value" or "remaining value" insurance where they cover only the REMAINING estimated life of the item. Say your roof has a 30 year estimated life (high-end long-life shingles) - if the damage is minor or localized (say maybe a localized section of tearoff due to high wind) then that would be repaired with replacement shingles. If the damage was general and severe, then entire roof reshingling like it sounds like you had in 2010. In either scenario, with replacement coverage (which has higher premiums of course - we pay about 30% higher premium on ours with 34 year old house) they would assess the replacement at full replacement cost, paying out that minus your deductible of course. However, with depreciated / amortized / cash value value coverage, they would prorate their assessed damages by the remaining life of the item - so if say your roof is now 6 years old on a 30 year roof (though they might not rate it that long a life regardless of manufacturer claims - commonly 20 year "insurance life" on shingle roof) they would factor the payment down to 24/30 (or 14/20 if using 20 year life as many do for shingle roofs) of the replacement cost as the "remaining life" portion they would cover - then take your deductible off that to figure how much you get paid by them (or how much they pay to the contractor). The pro-rated amount might not be based just on actual age - a poorly maintained roof with heavy moss growth or such they might say only has a couple of years remaining life regardless of actual age - ditto to property that is damaged or seriously deteriorated. I saw one $250,000 range about 20 year old house that was rated zero value because it has never been maintained and had significant termite damage, siding and wall rot, etc which had been documented in the last sale home inspection (was sold as-is, where-is as a fixer-upper to a young newlywed couple) - so their tornado loss was assessed at zero value even though the house was stripped clear to the ground. All the owners got was some compensation for the lost/destroyed personal possessions in the house, and the value of a gazebo they had bought and put up in the yard.

So - if the replacement cost is less than $11,000 and you have the same deductible still, again you still get no payment regardless of coverage type - because the payout amount would be the cost minus the $11,000 deductible if replacement value coverage, or with depreciated coverage the cost times maybe 14/20 or 24/30 minus your $11,000 deductible - still zero. You would potentially get paid anything at all only if your replacement cost (as they "adjust" or assess it) was more than $11,000; or significantly more if depreciated/amortized type policy.

One other factor - with two major hail damage claims in 6 years, if you file a claim (say you might get some small amount from them) bear in mind this might be considered excessive loss frequency from that cause and they could cancel your policy or rate your property high-risk and significantly raise the rates. I have lived in high-frequency hail/tornado areas where the insurance rates were as much as 5 times nearby same-state areas that did not have high recurrence rates of losses, just because that particular locale had a lot of severe thunderstorms and tornadoes. Think what the rates in Moore and Oklahoma City, OK are for instance because of the large number of major tornado losses that area has had - ditto to flood insurance in New Orleans and along parts of the Guld Coasdt (where it is even available). So, if your potential recovery would be small that might lead you to not file a claim even if you might get a small recovery, both because of the likelihood of your rates going up due to claim frequency, and the possibility of a dramatic rate increase due to loss frequency or maybe even losing your coverage entirely. And if you lose your policy, that goes into an insurance company database called CLUE and commonly means you either can't get coverage from any other company or it goes into a high-risk pool with very high rates.

Of course, you need to weigh how much you can afford to pay out-of-pocket for an emergency situation at any point in time, and of course what the difference in annual premiums is for the various deductible amounts. A $500 deductible policy premium will be pretty costly - maybe as much as 25-50% higher than than one with several thousand $ deductible, as noted above. With insurance company operating costs and profit and such, you can expect (on the average over the entire customer population) to recover perhaps 50% of your premium payments in coverage (though of course every person's history and tendency to file claims is different), so generally over the long term if you have significant enough personal assets to cover an emergency, higher deductible will pay off in the long run. Of course, if you have a major loss early on in your coverage life you lose money by having a high deductible, and of course there are people like our family that pay premiums for various types of insurance year-in and year-out for decades and never have a claim, so you have to determine a happy (or acceptable at least) pearsonal comfort zone where you are not paying too high a premium by having a very low deductible, or taking too high a personal risk by having too high a deductible. For many people, something in the thousand to few thousand range (for a normal vallue home) is what they find acceptable and comfortable.

And note - if you are going to net little or nothing from a claim, do not file an insurance claim on it - because even claims where they pay nothing out are counted against your claim record and can result in higher premiums, and commonly loss of no-claim discounts. Also, claim records generally are based on the NUMBER of claims and frequency, not the $ paid out - so a minor claim with little compensation to you can result in significant long-term (commonly about 5-10 years) claims-rated high premiums for little benefit. With some companies even calling about whether some type of loss is covered results in a claim notation and higher premiums. Ain't the games many lawyers and insurance companies (and politicians) play wunnerful ?

One other thing on hail damage - some insurance companies do "wrap-up" or "inclusive deductible" coverage if you have claims for the same incident on multiple policies - so say house and car, or several cars, are damaged by the same hail storm or tornado or whatever - some apply only the highest deductible from one policy, not all the deductibles from all the policies against all your claims arising from that one incident. Hail land wind-related damage is where this wrap-up benefit ismost common, but can happen in other incidents - like say your car rolls and damages your parked boat and runs into the house too - three potential policies involved but maybe only one deductible applied.

Answered 4 years ago by LCD

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