Getting a new roof through your RCV insurance policy is great because all or most of the cost is covered. However, the insurance process and its steps aren’t without headaches.
One of the biggest points of confusion is about who gets the second check for the recoverable depreciation. Look, I get it’s hard to hand over what you may think is free money.
However, there’s a reason the roofer gets the depreciation check. And it’s not just to get more money.
For over 30 years, the team at Bill Ragan Roofing has helped homeowners understand the insurance process and everything that goes into it. Because of this, I’ll help you understand recoverable depreciation.
This article answers the following questions:
- How should recoverable depreciation work?
- Why does the roofer get the depreciation check?
- How do you avoid committing insurance fraud with the depreciation check?
How should recoverable depreciation work?
Before we get to why you give a roofer the depreciation check, you need to understand how it works. When a claim is approved, the insurance company sends an estimate for the scope of work required to restore the current roof to a brand-new version of itself.
You’ll get the first check for the actual cost value of your roof while the insurance company holds back the recoverable depreciation. After finding a roofing contractor and supplementing anything missing from the insurance estimate, your roof gets replaced.
After the roof replacement is 100% completed, you or your roofing contractor must provide proof that the scope of work was done per the claim. If everything checks out, the insurance company sends the second check for recoverable depreciation.
But if you don’t get the work done or follow the claim exactly, the insurance company doesn’t have to send you the depreciation check. This leaves you paying out of pocket and can lead to insurance fraud (more on this in a minute).
So, why does the roofer get the depreciation check?
After learning how the depreciation check works, you’re ready to understand why the roofer gets it. Just like a normal roof replacement, the first actual cash value check for an insurance roof replacement acts like a deposit for the materials.
If you weren’t getting a new roof through insurance, you would pay whatever is left after the deposit once the job is done. For insurance, the second depreciation check covers the rest of the cost, which is why the roofer gets it.
They get the check simply because it’s what they’re owed for completing the job like any other service. Now, you won’t have to give it to the roofer if you go ahead and pay for the rest before receiving the check.
In this scenario, the roofer gets their payment sooner, and you keep the depreciation check when it’s sent to your home or bank account. Both ways are fine, but the important thing to remember is that the depreciation check is specifically meant for the provided roofing services.
How do you avoid committing insurance fraud with the depreciation check?
As I said earlier, your roof must be replaced in accordance with your claim paperwork to get recoverable depreciation. That’s why the insurance company won’t send the depreciation check until there’s proof that the work was done correctly and in line with the estimate.
Failing to provide proof and then requesting the check for depreciation leads to insurance fraud. Some homeowners do this inadvertently because the roofing contractor didn’t follow the scope of work correctly.
But unfortunately, others leave stuff off on purpose to keep extra money. This is outright committing insurance fraud.
To avoid this and keep everyone honest, reputable roofing contractors ask to see your insurance paperwork. They do this to ensure they follow the claim correctly so neither you nor the roofer commit fraud.
An experienced roofer will even help you supplement anything that insurance leaves off. Unfortunately, some homeowners won’t share their insurance paperwork because they don’t know how the process works or who to trust.
But with insurance fraud increasing in the roofing industry, I won’t work with a homeowner if they don’t show me their insurance paperwork. The last thing you or a roofer needs is the insurance company making life difficult.
Why is your insurance estimate much lower than the roofing contractor’s?
Now you know why the roofer gets the depreciation check and how to avoid committing insurance fraud with it. As long as the roofer followed the scope of work correctly, there should be no issue handing over the depreciation check.
Unfortunately, there’s a chance the deprecation check won’t be enough to cover the rest of the new roof’s cost. This is mainly due to insurance being much lower than your roofing contractor’s estimate.
You would think insurance companies have no problem taking care of customers who’ve been paying their premiums for years. This just isn’t the case, and it requires some fighting to get what you're owed.
That’s why you need to know why an insurance estimate is lower than a roofing contractor and what you can do about it.
Check out What to Do When My Roof Damage Insurance Estimate is Too Low to learn why and your options when insurance doesn’t give you enough money to cover an entire roof replacement.
