| 10/16/2011 10:31 PM |
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We are selling my mother's home that had a prior hail claim that included replacement of the roof. It was only 3 years old. My mother did not replace it but did repair it. She never pursued the depreciation since she did not do the work.
Will the purchaser have problems getting another insurance company to cover the roof? If they have a claim in the future, will the be prevented from getting a roof settlement?
Thank you for your insight! |
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Leland Advanced Member Posts:741  
| 10/17/2011 3:33 PM |
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Will the purchaser have problems getting another insurance company to cover the roof?
This is really an underwriting question, not so much a claims question. From a claims standpoint, the roof may have suffered enough damage to deserve a payment sufficient to replace the roof. That amount of damage would not necessarily be enough damage to cause a new carrier to refuse to cover the house, especially after it has been repaired. The underwriting dept theoretically evaluates the "risk" and decides how much premium to charge, or whether to even accept the business at all. If the roof is very old and worn the new carrier could require that it be replaced as a condition of obtaining coverage. Or they might not bother to inspect it at all. They could for example, decide the roof was in reasonable condition, but decline to accept coverage for some unrelated reason, such as uncleared brush, or cracked foundation. The new carrier has access to the ISO claim history information so they can see that a claim was made for hail damage. If for example, the old carrier did an underwriting inspection after the hail claim, and discovered the roof was unrepaired and leaking, the old carrier would possibly cancel or "non-renew" the coverage. That event would be listed in the ISO history and would be a red flag to the new carrier. But you haven't given any indication that such a thing happened. I do not work in underwriting so my opinion is based on second hand information. You can ask an insurance company or agent directly, or perhaps others on this website can share their knowledge.
I don't think it is so much a question of the new carrier selectively refusing to cover a future roof repair. It is more a question of whether they will cover the house in its entirety. Even with an old roof most carriers would cover the house, and then pay for whatever claim may arise later on.
The new insured is in a whole new relationship with the carrier, even if it is the same carrier. The insurance company cannot say "we are going to pay you less money because we had a previous customer that didn't fix the roof when we paid them for it".
The new carrier can say "This roof is old, damaged, and repaired. We are applying lots of depreciation".
Another issue is disclosure. If the roof is damaged or repaired by a handyman, that may be a disclosure item. In California a seller must disclose negative things they know about the house. If the house has termite damage and the seller truly doesn't know about it, they don't have to disclose it. But if they knew and kept silent, the buyer may win a lawsuit.
Even if your state does not have a statute or case law requiring disclosure, it might be prudent to disclose anyway. If you don't disclose but the buyer has a copy of an inspection report so they know about the problems anyway, there would be no harm in my opinion.
The above is just my personal opinion and you should not rely on it as I am not an attorney or real estate agent and I also don't have all of the facts. You should consult with an attorney and/or real estate agent to obtain an opinion you can rely on.
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LelandAdvanced Member Posts:741
| 10/17/2011 5:00 PM |
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Also, If you are in a state that uses escrow, a buyer using bank financing will need to have insurance coverage in place as part of the escrow process. If they don't get insurance, or their insurance company refuses to insure a house with a bad roof, the buyer's bank won't send the money into the escrow account, and the sale won't go through. If such a thing were to happen you could fix it by getting the roof fixed while in escrow, or cancel escrow and start over. If you didn't have money to fix the roof, you could find a roofer that would be willing to get paid out of escrow so that he would be guaranteed to get paid, as long as the sale went through. It might help to get a referral from your real estate agent for a roofer that is familiar with getting paid from escrow proceeds. If you fix the roof you might be able to increase the selling price, and the buyer might be happy to pay the increase, knowing that they are getting a new roof, perhaps also paying only a little bit extra per month (financing) to get the roof.
If the roof is really shot, you might need to fix it in order to sell the house, especially if the market is soft. It might be better to spend $12,000 on a new roof, even if you can only increase your asking price by $9000.00, rather than have a house with a messed up roof that no one wants (and no buyer can get insurance on, or get a loan on). That house might sell for $20,000.00 below market, and/or take a year to sell. Again, you can always try to get a roofer to get paid out of the sale proceeds, if you don't have the cash upfront.
Another strategy you can use is to offer a roof repair credit to the buyer. Get one or two bids from roofers, and offer a credit for that amount. The buyers bank will note that part of the purchase price will be held in escrow for the roof to be repaired. That money can't be used for anything else, and the buyers bank will be happy. You will receive the purchase price, less the roof repair credit (and other fees).
If you are in a state where attorneys handle sales without setting up escrow accounts, you can still do the same idea, just handled by the lawyers.
Again, the above is just my personal opinion and you should not rely on it as I am not an attorney or real estate agent and I also don't have all of the facts. You should consult with an attorney and/or real estate agent to obtain an opinion you can rely on.
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CatAdjusterX Veteran Member Posts:964
| 10/18/2011 2:23 AM |
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Posted By Stormkat on 16 Oct 2011 10:31 PM
We are selling my mother's home that had a prior hail claim that included replacement of the roof. It was only 3 years old. My mother did not replace it but did repair it. She never pursued the depreciation since she did not do the work.
Will the purchaser have problems getting another insurance company to cover the roof? If they have a claim in the future, will the be prevented from getting a roof settlement?
Thank you for your insight!
Hi Stan, I had a few claims like this. The most recent was a few years back .
Mississippi(2006 Katrina re-open Traveller's) initial claim called for a 2 square repair at which time the insured obtained an attorney. During the reinspection, it was apparent said roof was atleast 10 to 12 years old(20yr 3 tab)loss of significant granules and somewhat brittle (overall bad condition) Attorney claimed the roof was replaced 5 years prior when home purchased from prior occupant and current condition based upon sitting for 8 months.The roof had been totalled from tornado back in 1999 yet obvious said occupant merely repaired.I recommended to close with no additional payment. Attorney pushed for mediation in that the underwriting inspection at purchase made no mention of any deficiencies regarding said roof. (insured stated that they believed the roof to be new in our recorded statement)Attorney prevailed in mediation and Traveller's bought the roof. However, the roof was depreciated to an exercise in futility for the attorney.
All in all, like Leland stated this appears to be more of an underwriting/administrative issue as opposed to a claims issue.
As far as the buyer of your...... "mom's" house is concerned, It would seem that when the buyer has an appraisal "prior to purchase" as well as an "underwriting inspection" that the roof issue would come to light and the house would not close escrow until resolved. However, who knows if the underwriting and/or appraisal would even look close enough these days
"A good leader leads.....
..... but a great leader is followed !!"
CatAdjusterX@gmail.com
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| 10/18/2011 7:19 AM |
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Thank you both for your excellent repies!
As a followup you need to know that the roof is only about 5 years old, 30 year IR laminate in great condition. The hail damage was minimal but they did pay to replace the roof. My mother, being old, used the moneys to make roof repairs and others that were needed to the interior.
Today, I would believe the roof to be marginal for replacement still. The purchaser is aware of the ISO history and knows that she did not replace the roof. I believe the Realtor is driving some of the fear that the roof may not be covered or that the Purchaser may receive a penalty with a higher deductible.
I believe that neither would be the case and it would be covered under a new policy with a new carrier. As we all know, most carriers do not inspect residential properties unless there is reason to do so. This home is in a very affluent gated community and do not believe that it would be inspected. Even if it were, my belief is that it would still be insurable in its present condition.
Would still like to hear your responses to this updated information.
Thank you! |
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StormSupportGold Member  Member Posts:203
| 10/19/2011 10:32 AM |
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Well, it seems to me that if the insurance company paid to have the ENTIRE roof REPLACED, and your mother only did repairs, and used the money for 'other' things, that she owes the company the portion of the money not used to REPLACE the WHOLE roof. The insurance company doen't pay for a repair only to have the money used for other things.
Actually, I believe they call that "Fraud". Do the right thing, ALWAYS
~Meg~
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CatAdjusterXVeteran Member Posts:964
| 10/19/2011 7:39 PM |
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Posted By Meg on 19 Oct 2011 10:32 AM
Well, it seems to me that if the insurance company paid to have the ENTIRE roof REPLACED, and your mother only did repairs, and used the money for 'other' things, that she owes the company the portion of the money not used to REPLACE the WHOLE roof. The insurance company doen't pay for a repair only to have the money used for other things.
Actually, I believe they call that "Fraud".
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Ms. Meg, it happens all the time and is completely legal.
The insured has no obligation to use said funds(claim award) towards restoring their home to a pre event condition and legally owes nothing to the carrier. His mom only received ACV and never pursued the recoverable depreciation.
If you go back to Katrina/Rita(Louisiana/Mississippi), even homes with 20+ ft of water that ultimately destroyed the risk were getting claims awards on the HO side for roofs and associated components even though the insured has no intention of rebuilding said risk.
More recently hurricane Ike (Galveston Island) and the "slab claims" . If I remember correctly I believe those carriers payed something like 12% across the board on the Homeowners insurance claims that were previously denied due to homes obliterated from storm surge. All the carrier can do to mitigate said loss is to pay ACV and since risk will not be rebuilt, the recoverable depreciation becomes NON recoverable depreciation.
Almost on a daily basis you will have insured's who were awarded X amount of money to replace roof and then turn around and pay another person/company half the amount awarded to replace or repair said roof. Not illegal but could cause an issue down the road with future claims
Robby Robinson
"A good leader leads.....
..... but a great leader is followed !!"
CatAdjusterX@gmail.com
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LelandAdvanced Member Posts:741
| 10/19/2011 8:06 PM |
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So if the insured has metallic green wallpaper and green hi-lo carpet they have to replace that? If they don't its fraud? If they have a 4 bedroom house that burns down they have to rebuild a 4 bedroom, not 3? Going back with a 3 bedroom is fraud?
That's one of the most preposterous ideas I have ever heard in this business.
If the insurance pays for a roof replacement and the insured only repairs it is not fraud. It is also not illegal. It is also not unethical. It is their right to choose what repairs to do or not do, how much to pay, when to get it repaired, what brand to use and whether they are going to do some of the work themselves.
If that old lady wants to throw a blue tarp on her roof and spend the rest of the money in Las Vegas who is anybody to tell her no?
Only in a rare circumstance could it be fraud- lets say somehow the 80 year old lady hoodwinked the insurance company into paying for a roof that didn't need to be replaced under the terms of the policy, or lied in writing about what kind of shingle was there, and got paid more money by doing so. (Elements of fraud: a) a lie b) in writing c) the teller knew it was untrue d) the victim relied on the lie to their detriment)
If the insurance company sent an expert (the adjuster) who decided the roof needed to be replaced UNDER THE TERMS OF THE POLICY CONTRACT AND THE STATE LAW existing at that time, THEN THE INSURANCE HAS TO PAY BECAUSE IT IS THE RIGHT THING TO DO, BY LAW.
THERE IS NO LAW THAT SAYS AN INSURED MUST DO THE FULL REPAIRS THE INSURANCE COMPANY PAID FOR.
THERE IS NO LAW THAT SAYS IT IS FRAUD TO TAKE THE MONEY AND DO WHATEVER THE INSURED FEELS LIKE WITH IT.
Yes, the carrier can refuse to insure the house going forward, and yes they can non-renew.
But the last time i checked we still live in a free country.
And I have never seen an insurance contract that says "We will pay you the reasonable amount necessary to restore your property, but only on the condition that you actually perform the repairs"
I am just shocked that any adjuster would think otherwise.
Unbelievable.
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CatAdjusterXVeteran Member Posts:964
| 10/19/2011 8:30 PM |
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Posted By Stormkat on 18 Oct 2011 07:19 AM
Thank you both for your excellent repies!
As a followup you need to know that the roof is only about 5 years old, 30 year IR laminate in great condition. The hail damage was minimal but they did pay to replace the roof. My mother, being old, used the moneys to make roof repairs and others that were needed to the interior.
Today, I would believe the roof to be marginal for replacement still. The purchaser is aware of the ISO history and knows that she did not replace the roof. I believe the Realtor is driving some of the fear that the roof may not be covered or that the Purchaser may receive a penalty with a higher deductible.
I believe that neither would be the case and it would be covered under a new policy with a new carrier. As we all know, most carriers do not inspect residential properties unless there is reason to do so. This home is in a very affluent gated community and do not believe that it would be inspected. Even if it were, my belief is that it would still be insurable in its present condition.
Would still like to hear your responses to this updated information.
Thank you!
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Stan
I am not picking on you but the text in red seems to be a bit contradictory, please clarify.
As a followup you need to know that the roof is only about 1) 5 years old, 30 year IR laminate in great condition. The hail 2) damage was minimal but they did pay to replace the roof. .
Today, I would believe the roof to be marginal for replacement still.
3) Carriers do not inspect residential properties unless there is reason to do so. This home is in a very affluent gated community and do not believe that it would be inspected. Even if it were, my belief is that it would still be insurable in its present condition.
1) Great condition ?
2)If damage was minimal why would the carrier pay to replace said roof? (I thought you stated a long time ago that you were either a restoration rep or PA, I could be wrong but that would make sense to rep your moms insurance claim and hence the roof was paid for
3) Carriers don't inspect residential properties unless there is a reason to. Wouldn't the ISO history warrant an underwriting inspection for the future occupant
Good luck my friend and god bless you,
Robby Robinson "A good leader leads.....
..... but a great leader is followed !!"
CatAdjusterX@gmail.com
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ChuckDeatonLife Member  Senior Member Posts:1110 
| 10/20/2011 12:30 AM |
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Over the term of my career many insureds have been paid more on a claim, certainly on roof claims, than the actual repair cost.
An individual turns in a claim to a big, experienced insurance company, the company hires a licensed professional to assist with determining the extent of physical damage, coverage and the cost of repairs. The licensed professional accomplishes the task and the big, experienced insurance company makes payment based on the licensed professionals reccomendation. The individual makes a repair and the repair costs less than the licensed professional's estimate. Keep in mind that the individual did not inspect the damaged property, knows nothing of the fine points regarding the damaged property or repair, did not act to deceive and is paid an amount in excess of the cost of repairs.
I would like to be a fly on the wall when the big, experienced insurance company and their licensed, knowledgeable expert take any action to recoup the difference.
A company I worked for in the 80's tried a similar action and regretted it. When the legal dust settled not only did the individual still have the difference she had a larger sum of money and attorneys fees.
Best all round if these kinds of claims are just swept under the rug.
"Prattling on and on about being an ass with experience doesn't make someone experienced. It just makes you an ass." Rod Buvens, Pilot grunt
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StormSupportGold Member Member Posts:203
| 10/20/2011 8:50 AM |
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Ever say something and
before it's completely out of your mouth, you wish you could retract it?
Well,
this is the case here...I completely misread this thread and made an erroneous
and ignorant statement, and wish I could retract it. But I can't and it's out
there so I retract it now, to the best of my ability, and walk away completely
embarrassed.
This will teach me to attempt to say anything intelligent after driving for 11 hours!
Do the right thing, ALWAYS
~Meg~
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LelandAdvanced Member Posts:741
| 10/20/2011 1:49 PM |
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Well Meg, you are one class act. And i shouldn't have been so harsh. You are a credit to your profession. I have also posted things that I later realized were wrong. I'm probably just not as quick to admit it.
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CatAdjusterXVeteran Member Posts:964
| 10/20/2011 11:20 PM |
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Posted By Meg on 20 Oct 2011 08:50 AM
Ever say something and before it's completely out of your mouth, you wish you could retract it?
Well, this is the case here...I completely misread this thread and made an erroneous and ignorant statement, and wish I could retract it. But I can't and it's out there so I retract it now, to the best of my ability, and walk away completely embarrassed.
This will teach me to attempt to say anything intelligent after driving for 11 hours!
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Ms. Meg,
I am aware over the last few years that you have found some of my comments and analogies offensive and whilst all of those analogies were meant in jest, I agree that they kinda stepped across the lines regardless of intent.
That aside I have always felt your posts and responses were insightful and that all were coming from the right place.
So from someone who has put their foot in their mouth more than a few times I say to you,"welcome to the club" and in that you command integrity and respect, your last post is all but forgotten already.
Robby Robinson
"A good leader leads.....
..... but a great leader is followed !!"
CatAdjusterX@gmail.com
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StormSupportGold Member Member Posts:203
| 10/20/2011 11:46 PM |
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Thank you gentlemen, I truly appreciate the kind words.
Do the right thing, ALWAYS
~Meg~
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| 10/22/2011 12:44 AM |
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It looks like you are in Texas. If your Mom's house is in Tx, here are a few bits of info that I have had first hand experience with in Tx.
1.Often the agent will write the policy but no inspection is done until after closing, then is rejected due to some non-qualifying problem, leaving the buyer without insurance.
2.Sometimes the binder is canceled within one or two days of closing when the carrier finds some other non-qualifying isssue. I had this happen on one sale and had to add the buyer as an additional named insured on my commercial property coverage so I could close on the sale the next day. She had until the renewal date of my policy to obtain a new policy. The coverage was RC and included liability.
3.In Texas, this problem can be alleviated by finding a VIP inspector who is licensed (some refer to it as a certification) by TDI to do a residential home inspection for insurability and will issue a certificate of insurability that requires the carrier to issue so long as the property meets their underwriting guidelines. If I inspect the house and find a bad roof, a certificate will not be issued because most, if not all, carriers will not write a policy without a good roof because of the additional exposure to the interior should a storm finish off the roof. I have not heard of a carrier writing a policy while excluding the roof because of the additional exposure from having a bad roof.
If a VIP inspector issues the certificate he is essentially certifying that there are no serious problems with the house that could cause a claim or allow damage to the house. However different companies have different underwriting guidelines such as age of the house. When purchasing 100 year old houses in the historic districts, I had a problem on occasion obtaining coverage because of the age when purchasing builder's risk policies. The sale I described above was a house built in 1909. When they found out the age they cancelled out.
The VIP report should contain any such information that an underwriter might consider. You can find VIP inspectors on the TDI web site. Most are insurance adjusters like myself, while some are also licensed with TREC for home inspections. The VIP has more authority that a TREC inspector because termite and insect infestations are to be reported by the VIP inspector along with some other inspections that are prohibited by TREC and other state law. State law says that insect inspections must be done by a licensed exterminator, but TDI regulations require the inspection overriding the requirement of being a licensed exterminator, although that industry along with TREC argues that the VIP can not. For that and similar disagreements, many real estate businesses prohibit their agents from using a VIP inspector, but the seller is free to use them for the purpose of selling.
I recommend obtaining a VIP inspection, and be there when it is done, but don't give any info on condition or prior claims until he asks or comments on a possible negative. I would not mention the payment issue because the only relevant info on the promulgate form that I can think of is if repairs were done and his inspection will either confirm that the roof is in good insurable condition, or that there is damage to be repaired.
It is common for an agent to pull a report and find prior water damage claims which triggers a VIP inspection request to determine if the repairs were properly made to be sure there is no rotten or damaged sub floor or oak flooring, or mold and mildew.
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claims_rayMember Posts:293
| 10/25/2011 7:43 PM |
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I still say we hang Meg from the nearest yardarm!
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CatAdjusterXVeteran Member Posts:964
| 10/25/2011 9:52 PM |
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Posted By rickhans on 22 Oct 2011 12:44 AM
It looks like you are in Texas. If your Mom's house is in Tx, here are a few bits of info that I have had first hand experience with in Tx.
1.Often the agent will write the policy but no inspection is done until after closing, then is rejected due to some non-qualifying problem, leaving the buyer without insurance.
2.Sometimes the binder is canceled within one or two days of closing when the carrier finds some other non-qualifying isssue. I had this happen on one sale and had to add the buyer as an additional named insured on my commercial property coverage so I could close on the sale the next day. She had until the renewal date of my policy to obtain a new policy. The coverage was RC and included liability.
3.In Texas, this problem can be alleviated by finding a VIP inspector who is licensed (some refer to it as a certification) by TDI to do a residential home inspection for insurability and will issue a certificate of insurability that requires the carrier to issue so long as the property meets their underwriting guidelines. If I inspect the house and find a bad roof, a certificate will not be issued because most, if not all, carriers will not write a policy without a good roof because of the additional exposure to the interior should a storm finish off the roof. I have not heard of a carrier writing a policy while excluding the roof because of the additional exposure from having a bad roof.
If a VIP inspector issues the certificate he is essentially certifying that there are no serious problems with the house that could cause a claim or allow damage to the house. However different companies have different underwriting guidelines such as age of the house. When purchasing 100 year old houses in the historic districts, I had a problem on occasion obtaining coverage because of the age when purchasing builder's risk policies. The sale I described above was a house built in 1909. When they found out the age they cancelled out.
The VIP report should contain any such information that an underwriter might consider. You can find VIP inspectors on the TDI web site. Most are insurance adjusters like myself, while some are also licensed with TREC for home inspections. The VIP has more authority that a TREC inspector because termite and insect infestations are to be reported by the VIP inspector along with some other inspections that are prohibited by TREC and other state law. State law says that insect inspections must be done by a licensed exterminator, but TDI regulations require the inspection overriding the requirement of being a licensed exterminator, although that industry along with TREC argues that the VIP can not. For that and similar disagreements, many real estate businesses prohibit their agents from using a VIP inspector, but the seller is free to use them for the purpose of selling.
I recommend obtaining a VIP inspection, and be there when it is done, but don't give any info on condition or prior claims until he asks or comments on a possible negative. I would not mention the payment issue because the only relevant info on the promulgate form that I can think of is if repairs were done and his inspection will either confirm that the roof is in good insurable condition, or that there is damage to be repaired.
It is common for an agent to pull a report and find prior water damage claims which triggers a VIP inspection request to determine if the repairs were properly made to be sure there is no rotten or damaged sub floor or oak flooring, or mold and mildew.
..........................................................................
Hi Rick!
I am curious as you said you were a VIP in addition to being an adjuster.
Would you be so kind as to maybe drop me an email at catadjusterx@gmail.com and you could tell me more about that. Is that a different type of license or will an adjuster's license suffice?
"A good leader leads.....
..... but a great leader is followed !!"
CatAdjusterX@gmail.com
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| 03/04/2012 2:07 PM |
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"Each of us as human beings has a responsibility to reach out to help our brothers and sisters affected by disasters. One day it may be us or our loved ones needing someone to reach out and help."
RC ESTES
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