In Need of a New Roof? Can Your Home Insurance Cover the Costs?

Every property owner understands the crucial role a roof plays in safeguarding a home. It serves as a shield against the elements, preventing leaks that could harm the interior and lead to mold growth.

However, roofs come with a hefty price tag. According to This Old House, the typical cost for a roof falls within the range of $8,500 to $14,300, with some projects costing even more. Faced with such substantial expenses, homeowners may question whether their homeowners insurance covers the expenses associated with a new roof.

Unfortunately, the answer is not as straightforward as it might seem, as home insurance may or may not cover the cost under specific circumstances. Here's what homeowners need to understand about whether their insurer will foot the bill for a roof replacement or if they'll need to dip into their own funds.

Determining when home insurance covers a roof:

Homeowners insurance will step in to cover the expenses related to a roof replacement or repairs only if they are deemed necessary due to a covered cause. For instance, a policy would typically cover a new roof if it was required because of:

• Fire
• Wind damage
• Hail

Homeowners should review their policy to ascertain whether it is an open peril or a named peril policy. An open peril policy would cover roof replacement if a new roof was needed due to any unexpected disaster or event not specifically excluded. On the other hand, a named peril policy would only cover a new roof if the damage resulted from one of the disasters listed in the policy contract.

For those who prefer not to delve into the intricacies of insurance policies, a simple call to their insurance agent or homeowners insurance company can clarify the circumstances under which a new roof might be covered.

It's crucial to note that insurance will not cover a roof that simply ages and wears out, nor will it cover issues resulting from neglect. If a roof is 30 years old and develops a leak, this is not a situation covered by insurance; the homeowner would need to cover the costs from their repair funds.

What to do if insurance doesn't cover the roof:

When insurance falls short, paying for a roof replacement can be a financial burden. Homeowners, however, can plan for this inevitability, as most roofs need replacement eventually, typically lasting at least 15 years (depending on the material).

A wise approach is to set aside around 1% of the home's value each year in a dedicated account for repairs. While this fund may not be needed annually, it ensures that sufficient funds are available when major expenses, such as a new roof, arise.

For homeowners lacking savings but urgently needing a new roof, financing becomes a viable option. This can be achieved through personal loans or a home equity loan or line of credit (HELOC). Personal loans are often quicker and involve less paperwork but may have a higher interest rate and lack tax deductibility. Home equity loans or lines of credit require equity and additional steps like an appraisal and closing costs but may offer a lower interest rate and potential tax benefits.

Given the urgency of roof repairs or replacements, homeowners are advised to explore insurance coverage or alternative financing options as soon as issues with the roof become apparent.

Source: The Ascent