New Federal Rules For Insurance Roof Coverage

[HereOnThePrimalEdge]

I think Market Watch lets you read an article or two each month, so hopefully this link works.  

Best to check your homeowners policy as Federal guidelines now allow insurance companies to raise your premium 7-10% if you file a claim on a damaged roof, and some policies won’t cover roof replacement cost, but actual value.  So if your roof is old, your insurance will only pay what they think it was worth at it’s current age and condition.

https://www.marketwatch.com/story/insure...me_persfin

[Punatang]

Fake news.  The new rule is designed to make housing more affordable. Full stop. The states regulate insurance. 

The rule is regarding Fannie Mae and Freddie Mac requirements.  That is Federal.

Insurance companies could always raise your rates. That's been happening in Hawaii for a long time. 

Insurance companies could always pay actual cash value (ACV/depreciated value) for a roof claim. HPIA (the quasi state insurance available in LZ1 and LZ2) has been doing it that way long before this rule. It is very common in the marketplace. The rule is just catching up to the market.

The rule just allows Fannie Mae and Freddie Mac to accept these policies which have already become common in the marketplace.  If you don't like that they are common in the marketplace, and you want the government to do something, write Josh Green and/or your state representatives. Please know you will be making housing less affordable for young families. 

The states regulate insurance and insurance carriers.  If you don't like what your insurance company is allowed to do, or not do, vote better in our Hawaii state elections. Period. 

https://www.fhfa.gov/news/news-release/f...duce-costs

[HereOnThePrimalEdge]

Insurance companies could always raise your rates.

Insurance companies are regulated by the Hawaii Insurance Division.  Insurance companies cannot just “always raise your rates.”


The new rule is designed to make housing more affordable.

Let’s say a homebuyer chooses the more affordable cash value depreciated option.  Then their roof blows off in a windstorm.  They can’t cover the cost of a new roof.  They throw up some blue tarps, apply for a loan with their bank for a home without a functioning roof.

What happens now to their affordable home and its contents?

[Punatang]

Well, if your hypothetical poor home owner wasn't able to afford the house in the first place because they could not qualify for the PITI with the obtrusive government regulations -on their loan, (what the rule was truly about) due to the high cost of insurance in Hawaii, then the roof is the landlord's problem and the non-homeowners are still screwed on the contents unless they had renter's insurance - which the Feds also have nothing to do with.

You seem determined to see a zebra here so I will leave you to that charade. 

Everyone else - don't let the fake news freak you out.  You just have more options now.  Yea!

[HereOnThePrimalEdge]

You just have more options now. 

Your insurance company has more options too, so be sure to read your policy coverage closely.  Policies are long, complex, and they change.  You may not be able to replace what you think you can replace.

Banks require collateral for a loan.  The loan process takes time.  If they send a home inspector to approve a roof loan (they will ask why you need a new roof) and the inspector sees your house under blue tarps, good luck.  Sometimes an option is a trap.  But your insurance company will have cashed your checks, and now cancelled your policy because, no roof.  Your mortgage company will take what’s left of your leaking tear down.  And now you’ve discovered, outside of Vegas the house doesn’t always win.  Especially your house.

[HiloJulie]

Calling this change of allowable insurance coverage an "affordability issue" for the homeowner is like how Ford Motor Company determined it was acceptable to allow a few hundred deaths a year due to the Pinto exploding when rear ended versus adding an $11.00 per car part to prevent any explosions, thus keeping the Pinto "affordable" to the consumer.

For the homeowner not paying attention to their insurance policies, it is a "band aid for a bullet wound." For the insurance companies and mortgage holder(s), it's another way to screw over the unsuspecting consumer.

Can't wait until we see how this plays out. Especially in Florida and Texas. I'm sure their insurance commissioners are on top of it!

[kalakoa]

Loan. Collateral. Insurance. Making lots of assumptions, there.

[HereOnThePrimalEdge]

Loan. Collateral. Insurance. Making lots of assumptions, there.

If you can afford to pay some of a roof replacement cost, you might prefer the lower premiums on a cash value roof policy.  Just make sure you read your policy and understand that’s what you have.  I asked to raise the deductible on my homeowner’s insurance some years ago because I never make a claim, I save a few dollars, and I can afford to pay for any potential damages under the deductible.  

Many people are on a tight budget.  A roof can cost $50,000-$70,000.  Not everyone has tens of thousands of dollars available to pay for a roof if there’s a storm.  Understand the risk.  Because, a roof is not something that’s optional.

If you choose a cash value policy, great.  If your insurance company changes your policy from replacement to cash value without a full explanation, or offer that coverage without a full explanation, not so great.  I’ve dealt with insurance agents over the years.  Most want to cash my checks, not answer my questions or spend 5 minutes to explain the details of my policy.

[terracore]

Not everyone has tens of thousands of dollars available to pay for a roof if there’s a storm.  

If it's a named storm, most policies won't cover any wind damage unless there is a separate windstorm policy ("hurricane insurance", misnamed, because it does not require a hurricane).   If the NWS or the NHC issues a warning/watch/etc for a named storm, the property is not covered by standard wind damage coverage. This coverage blackout period extends for 72 hours after the warning/watch/whatever is canceled. 

There is overlap here with a pre-existing thread, maybe refer back if anybody wants more details: https://punaweb.org/forum/showthread.php?tid=23291&pid=347528