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A week ago there was hail in our area, and my house was badly damaged. The insurer estimated that they would only pay $5,000 on my claim, but all of the estimates from roofing companies are at least $7,000. What can I do?

  • I am sorry to hear of your loss, but there is not much that can be done. Most home-owners policies have a deductible amount which you can choose: the higher the deductible, the lower the premium. – Dilip Sarwate Apr 23 '16 at 3:34
  • Yes, but the problem is my neighbor's house with Country Wide insurance and they paid her 16k after deductible, her house is 3300 Sqrt feet. – Titi Apr 23 '16 at 3:40
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    @Titi ask her who her insurance agent is and switch – littleadv Apr 23 '16 at 7:31
  • Your neighbor may have purchased a different type of insurance plan/coverage that makes that possible. – Lexi Apr 23 '16 at 14:30
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    Also, your neighbor may be paying a higher premium for that insurance. Before you switch compare overages and costs. – JohnFx Apr 23 '16 at 17:41
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If you have some equity in the house you might be able to get a home equity line loan to cover the gap between the insurance payment and the cost of repairs.

What you are describing is pretty typical and not a sign that the insurance company is somehow doing you wrong. It is typical for insurance to have a deductible where you are responsible for at least some of the cost of repair.

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The original question says nothing about a deductible, although most homeowners policies carry some kind of deductible. So we should not assume that the difference is solely due to a deductible being applied.

First, the insured needs to check the policy for the amount of the deductible, and whether it is an ordinary deductible (more typical; the insurer pays for the difference in excess of the deductible) or a franchise deductible (certain "premium-type" policies; if a loss exceeds the deductible, the insurer pays the entire amount, sometimes also referred to as "waiving" the deductible).

Second, the type of coverage influences the insurer's liability: if the coverage is on a replacement cost basis, then the amount paid reflects the cost to repair the damage with like materials and quality, not factoring in depreciation. If the coverage is on an actual cash value basis, then this is essentially replacement cost minus depreciation. If the coverage is for market value, this is the cost to functionally repair the damage with modern materials and craftsmanship, even if the result is superior to the original.

So, it is clear that the policyholder needs to review the policy's coverage and deductible carefully to see what was covered. If coverage was provided on a replacement cost basis, even if there is zero deductible, then you can see how, for example, an old, weathered roof made of lesser quality materials no longer available, would cost $5000 to replace with a roof of like kind, but roofing companies would estimate $7000 to do the job with modern materials.

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