Friday, Oct 12,2012
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Tennessee homeowners insurance providers may be deciding to shift their roofing policies to better reward proactive maintenance, according to the Tennessee Department of Commerce and Insurance.
Providers in the region are planning to make a switch from the current Replacement Cost policies that are in place to Actual Cash Value policies. In an effort to explain the change in regulation to consumers, the department has provided a breakdown of the differences in coverage.
Actual Cash Value policies pay consumers for the cost of replacing their roof when necessary, but subtract a certain amount of wear and tear. For example, if a consumer had a $10,000 roof that was five years old, the insurance company would subtract a certain amount of the cost from the payout for each year. So if the subtracted amount was $500 per year, the insurance company would pay $7,500, with the additional subtraction of a deductible reducing the payout further.
With a Replacement Cost policy, the insurance company pays the full amount to replace the roof at today's cost, subtracting the deductible. Wear and tear do not factor into these policies.
The switch to ACV policies would reward proactive maintenance on the part of the consumer. Although the Insurance Information Institute notes that maintenance and upkeep are already rewarded by lowered policy rates, regular maintenance on the roof would then reduce the amount of years multiplied in the wear and tear aspect of the new policy.
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