It Can Be Tempting to Take That Insurance Money to the Bank—Here’s Why You Shouldn’t
Roof replacements are costly. That means, if your insurance provider approves a full replacement, they’ll wind up sending you a fairly substantial payment. For many homeowners, a sum of money like that could be incredibly useful, and we find many people wind up asking: What happens if I don’t use my insurance money to fix my roof? What if I put it in the bank, or spend it in some other way?
We completely understand the temptation to take that insurance check straight to the bank. But at Anchor Roofing, we’ve seen it happen far too often to Omaha homeowners that this leads to far more trouble than it’s worth. Not only are you jeopardizing your insurance coverage, but it could put you at risk of committing fraud. Here are all the reasons why you should put that money from your insurance claim toward fixing your roof instead of just keeping it.
You’re Probably Leaving Money on the Table
When insurance companies make a payout for a roof replacement, they don’t typically distribute the full amount upfront. While the exact proportions vary, you may receive only 50% of the cost upfront, or you may receive the value of your roof minus depreciation. If your roof is older—say, more than 25 years old—that could be as little as 10–15% of the replacement cost. The remainder of the payment is then withheld until your carrier confirms that you’ve repaired or replaced your roof as required.
What this means is that simply taking that money to the bank instead of fixing your roof will leave a substantial sum of money on the table. While the upfront sum is significant, it’s much less than what you’d receive if you completed your roof replacement. Further, you cannot claim this remainder in future claims regardless of the reason for the loss.
Your Roof Will No Longer Be Covered
The last thing your insurance provider wants to do is leave you with a faulty roof, as this is a major liability. That’s why they disburse payments in installments so that homeowners will actually complete needed roofing work.
If you don’t complete repairs or a replacement, however, your insurance provider will likely just decide to no longer cover your roof. This means if another storm deals further damage, you won’t be covered and will have to pay for the replacement out of pocket.
In addition, if the original damage to your roof worsens, you won’t receive any further compensation. For example, if your roof was damaged by a storm and your insurance provider gave out a payment for the repairs, and then the roof continues deteriorating to the point that a replacement is warranted, your provider is unlikely to give you anything else.
It Could Jeopardize Coverage for the Rest of Your Home
Failing to repair or replace your roof can leave your home vulnerable to further damage. If the damage was significant enough to warrant a replacement, not replacing your roof leaves you open to leaks and other issues from damage progressively worsening.
This creates two major problems: one is that the interior of your home could become damaged, primarily due to moisture intrusion. The other is that if the inside of your home is damaged, you won’t be covered as it stemmed from a failure to replace your roof.
It Could Constitute Insurance Fraud
If all of these reasons weren’t enough, there’s one more possibility for what happens if you don’t use insurance money to fix your roof: insurance fraud.
Simply receiving payment for your roof and not making repairs generally will not constitute insurance fraud on its own. However, you could land in hot water if you then decide to make a claim on your roof for the same damage years down the line.
The best way to avoid any potential legal issues is simply to replace your roof.
Complete Your Replacement and Protect Your Home
If you’re wondering what happens if you don’t use your insurance money to fix your roof, the answer is nothing good overall. While you’ll have a nice sum of money upfront, you aren’t really profiting in the long run due to the withheld payment. What’s more, leaving your roof damage unaddressed is sure to cost you eventually, and your insurance provider won’t be inclined to help you either.
The best course of action is to simply schedule the roofing work you need. Your home will be better protected and you’ll have more peace of mind knowing that your roof is solid and sound. If your roof has significant storm damage, reach out to our team at Anchor Roofing in Omaha to schedule an inspection and get a quote!