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If you have recoverable depreciation, should this be in the judgement factor . Many adjusters who did not study the principals of insurance as diligently as others seem to think if you have "depreciation buy back coverage" that it makes direct damage a moot point in this judgement call.

depreciation buy back coverage(RCC) can not expand the definition of direct damage. The blue 3 tabs shown in the example had 0% value and no value can not be insured. To say the house will leak if the shingles are not replaced is not insurable. Its like a tree that is about to fall on the house.

As most of you know, CADO was created and designed to do exactly as Bob has done. Information sharing is a vaulable aid in this industry. I have always contended that you never know enough in this adjusting arena.  There are so many different trades, skills, and industry involved in our every day lives. Knowledge is power and information sharing is eternal.

Thanks Bob, you do a wonderful job and it is certainly appreciated. You obviously enjoy being one of the best and continue to educate yourself to make yourself one of the best. Good job my friend.

Thanks Tom, and I have some catching up to do on your time at this...

GW, I am with you on this one.

I understand. And like we were saying before, there are some examples of a non-pliable roof that will have grief doing a patch - but some salesman will try to apply that logic to every house on the street. Your example is the prize winner on the non-repairable thing, and I do see the wind damage. Obviously a roof that is beyond the grave is going to have tabs blow off all over the place where the neighbor subject to the same conditions has no missing shingles - and I look at those things when I am up on a roof.

The claims examiner you are working with is OK on replacing the entire roof as the covered scope of proper repair to the visible wind damage.  The examiner's that David works with have a different interpretation of the policy - and that happens.  That is part of the challenge of our job.  It amazes me how court decisions don't come to the same conclusions.  That's the world we live in.

If you working with one insurance company, and know who you are working with every day, this stuff gets aired out pretty quick.  If you are an independent and take assignments from a variety of examiners, we still make our best recommendation but never a commitment subject to final approval of the carrier.

Good point, you really can't let it cloud your judgment on the scope of repair.

Although it is true that the garbage on his roof had no value, that is not a battle I would choose to fight. At some point they served their purpose, time marches on, they became garbage - and a prudent homeowner would have replaced his roof years before this windstorm. Maybe it's a rental property, no pride of ownership, but if someone was paying the premium for years and the agent never looked at the house after the first sign up, "here we are - what do we do now".

Some of these neglected houses have an old "fire policy" with non-recoverable depreciation from a non-admitted carrier.  The wiring etc. is so old, no one else will insure it.  The 30 year old shingles have depreciated 100%.  Here in California a law went into effect in 2007 where we can only depreciate materials, so there would be a payable loss on this example.  They would get the full value of removal and installation labor even if zero for the shingle materials...

Right. It's amazing that some of these old garbage roofs DON'T leak, because you are looking at the 3rd layer...

I am getting into this discussion a little late but fortunately I have been extremely busy working lately and have not had time to browse the forums.  Ray, you touched on a subject that I had decided to ask about, then read your response,  but would like to carry it a little further and hear yours and others experience regarding RC vs ACV.  When a  roof looks similar to the one shown here but has  had extensive hail damage to all of the roof, & has to be depreciated,  I try to determine the age of the roof and depreciate it a reasonable amount, but not 100%,  which solves the question unless the insured complains that I depreciated it too much.  Out of 30 roofs this month, I only had one and it was not as bad as the photo above and we reached an agreed settlement.

However, when it is replacent cost, and the roof is over 50% damaged, I have always been told to write the whole roof. My understanding is that unless a prior insurance inspection of the house has determined that the roof has reached its lifetime expectancy and is not insurable, and the insurance company failed to take pre-emptive action, then there is no question as to whether buy a new roof or not.  I may not be seeing some of the gray areas here and would like to know more about how others deal with the 100% worn out roof when there is less than 50% damage with RC and the roof can't be just repaired.  I have not had that situation but would expect the carrier to say replace the whole roof because they don't want liability down the road if 1) the repair fails and there is interior damage, and 2) knowing that the roof is really not insurable, but don't want to cancel the policy, they have exposure for interior damage when the next storm takes off the shingles that would have stayed on if new.  Does this make sense? I am sure some of you have had to deal with this exact situation.

And I agree, no one who asks and wants to learn is an idiot.  Only the one who tries to cover up and fails to fix a mistake is.

Don't know about others, but when there is replacement cost coverage in place I have never been instructed to take more than 50% depreciation (on the replacement part only, not the removal).   That changes though on your substandard carriers, when just ACV coverage applies.  Your instructions and parameters of valuation will vary on those.

I agree with Mike, virtually every carrier I have worked for stops depreciating structure damage at 50% (even though I commented above that the previously photo'd roof was beyond it's useful life and depreciated 100%). It's true that it is way past 1/2 it's life, but for some reason carrier's don't take it. I have seen them go past 50% with contents items, old clothes, etc..

At some point you total out the slope, but if there is a non-damaged slope on the other side of the ridge - why would you include it in your estimate for "direct physical damage to property arising from a peril insured against"?

Previously there was a photo of an asphalt comp roof.  Here's a wood roof with deterioration so bad that the felt paper burned through years ago,evidenced by the deteriorated shingles below it.  This was the rear slope which had virtually no wind damage, the front slopes blew around like a deck of cards because the roof was garbage, but the back 1/2 was essentially not affected by the storm. The front slope had areas of missing shinlges that looked new, but here I am pointing to the "ridges" in the wood. It's like the rings on a tree, the spring growth is the soft part, the winter part of the ring is the hard part and forms the ridge as it deteriorates. This has been exposed for years, I would say at least 5 years.

The way this house was oriented, the claim consisted of a bit less than 1/2 the total roof area.  If you can stop it at a ridge or valley, I don't go beyond to undamaged areas unless the management tells me otherwise.  And that is the constant friction between a salesman who sells re-roofs and the adjuster who is focused on what changed on the DOL.

The fact of the matter is that the roof was toast before the Date of Loss. It could leak at any time - the owner has delayed replacing it for years.

We are not a maintenance policy, and as Ray said earlier, you cannot insure for something that hasn't happened yet (the next storm that "might" leak if we don't replace the entire roof).  I don't let any of that stuff sway my judgment when I am looking at damaged property - or I would be forever confused about what I am looking at.  I am not saying to do a sub-standard repair.  There are times when you do the entire slope, or the entire roof (if damaged). 

But generally speaking roofs are not subject to the same matching issues as a carpet inside the house, and patching is considered reasonable.  The Citizens of Florida training last year on tile roofing was interesting, allowing for patching with tiles that reasonably match the profile or re-manufactured to fit the profile.  You just know they are not going to blend in, but is considered a reasonable repair.  That is the other side of the coin from "buy everyone in town a new roof".

This is a great topic for all adjusters , old and new. All direct damage perils and ever property loss is that , has to start at the same point. The loss first- then repair or replace. Work this out FIRST. Then apply betterment (if any). This is now a ACV loss. The ACV has to be determined on ALL losses.

Now if the insured purchased RC coverage for a seperate premium (Homeowners, BOP, CP10-30) work out this amount(RC holdback) and show it on the statement of loss. RC coverage can not make a roof a total loss. NOR can it determine the ACV loss for the adjuster. 

Start thinking this way. replacement cost coverage= betterment buy back coverage that you paid for....Depreciation.... a better word is betterment, use that word. Betterment buy back coverage can never make a loss less than a total loss for complete replacement; A TOTAL LOSS THAT SHOULD BE A PARTIAL LOSS..

This still does not answer all the "adjusting" problems, but if you do it this way as best as you can, you will rewarded with more work.

Exactly.

There are at least four places in the finished file where this issue should be addressed, in my opinion:

1) The Diary. The results of the adjuster's scope should be addressed in detail in the diary: Cause(s) of the loss; type of roof covering, including number of layers, color, and relative quality; age (determined by asking the insured, and/or subjective judgment by observation, and/or perusing purchase closing documents); pitch(es); condition of the roof overall, or of individual slopes, before the event that triggered the loss (including maintenance and other issues such as ongoing mechanical damage from tree limbs, flashing shortcomings, etc.); previous repairs; corresponding damage to other covered structures and the rest of the neighborhood. Also note what's not there, such as a lack of drip edge or ventilation.

2) The Sketch. A text note describing the roof covering, age, etc. is important; otherwise, we're just generating a bunch of lines with measurements attached to them. A simple but accurate sketch with a lot of text information is almost always better than a highly-detailed sketch without any explanatory notes. (Note: The sketch also often includes info such as wind direction, area(s) damaged, etc.).

3) The Photos. A picture may be better than a thousand words in some cases, but when it comes to a claim file captions are a must. What may seem apparent to the person that took the photo won't necessarily be apparent to anyone else. If you know that a roof is getting fairly old, include specific photos to back it up: "Notice shingles curling at edges", "Severe granule loss from weathering", etc. If there's no drip edge, note such in a caption. If there is more than one layer, show it. Better yet, combine the two into one photo.

4) The Estimate. Each "room" in the estimate tree needs a separate description of the scope of damage and cause(s) of the loss. In addition, each line item that is subject to depreciation, whether recoverable or non-recoverable, needs an explanation of how the depreciation was determined.

While the above specifically describes roofing, it applies to anything that is subject to depreciation. I have found that a good number of my estimates have almost as many text note lines as the line items themselves. Thank God for copy-and-paste LOL!

The overall goal here is to force clarity of thought. Decisions must be made, and the decision-making process should be as transparent as possible. The file examiner should be able to understand how we make our determinations based on the file that we submit.

The insured, however, should not be faced with surprises when he or she gets their copy of the estimate with the check. The ideal time to inform the insured of depreciation issues is at the time of the scope. I suspect that some claims handlers neglect discussing this (often prickly) subject with the insured, and even make a bogus diary entry to the effect that such a conversation took place. This practice is sure to backfire.

I was re-directed to this thread via a link from another one and I just want to applaud the infomative nature, especially by providing additional links and photos to assist.

Great Job and i wanted to get subscribed to updates on this one.  It's too good to miss.

Thanks.

Ed