As a homeowner, protecting your roof is key to protecting your home. Your roof is your home’s first line of defense against the elements, and in Florida, it’s really put to the test. Between the sun, wind, rain, and hurricane-force winds, your roof works hard to protect you, year-round. But if it gets damaged, how will your insurance cover the repairs or replacement?
At Ovation Home Insurance Exchange, we offer two main coverage options for insuring your roof: replacement cost and stated value. Both have their benefits, and it’s important to understand the differences so you can choose the perfect coverage option for you.
What Is Replacement Value Coverage?
Replacement cost coverage is designed to cover the full cost of repairing or replacing your roof with new materials, at today’s prices. So, if your roof is damaged by a covered event – for example, a big storm blows through and causes major leaks – your policy will pay to restore it to its original condition, no matter how much prices have gone up since your roof was originally installed.
For many homeowners, this option provides peace of mind. You don’t have to worry about how old your roof is or its current condition. As long as the damage is covered, your roof insurance will take care of bringing your roof back to what it was, using up-to-date materials.
What Is Stated Value Coverage?
With a stated value endorsement, you and your insurance company agree ahead of time on the specific value of your roof. This amount is typically based on its age, condition, and the cost to repair or replace it at the time the policy is issued. Unlike actual cash value (which considers depreciation and can result in lower payouts), stated value takes the guesswork out of the equation. You know up front what your roof insurance will pay, which can make budgeting and planning easier.
Here’s an important note: Even if you choose stated value coverage, in the event of a total loss caused by a hurricane, Ovation will settle the claim on a replacement cost basis. [BS1] This means, in the worst-case scenario, you’ll still have the security of knowing your roof can be fully replaced at today’s prices.
Pros & Cons of Replacement Cost Roof Insurance
Replacement cost coverage ensures your roof can be repaired or replaced with today’s materials and prices, giving you full financial protection. But like any option, it has both upsides and trade-offs to consider.
Pros
- Full replacement at today’s costs. No matter how old your roof is, you’re covered for the cost of a full repair or replacement using current prices and materials.
- No worries about depreciation. You don’t have to worry about how much value your roof has lost over time.
- Peace of mind. You know you’ll get your roof back to its original state without paying out of pocket for rising material or labor costs.
Cons
- Higher premiums. Because replacement cost coverage offers more comprehensive protection, it usually comes with a higher price tag. You’re paying for the assurance you’ll be fully covered, no matter what.
- Not ideal for older roofs in poor condition. If your roof is already nearing the end of its lifespan, you may be paying more for coverage you may not fully take advantage of unless a disaster occurs.
Pros & Cons of Stated Value Roof Insurance
Stated value coverage sets a fixed amount for your roof’s value, offering predictability and, oftentimes, lower premiums. However, this option also comes with certain limitations.
Pros
- Predictable payouts. You and the insurance company agree on the value of your roof ahead of time, so there are no surprises when it comes time to file a claim.
- Lower premiums. Because the stated value is often lower than what replacement cost would be, you can often save money on your premium. This can be especially helpful if you’re looking to balance affordability and protection.
- Great for well-maintained, mid-age roofs. If your roof is in good condition and still has a lot of life left, stated value can offer solid coverage without the need for full replacement coverage.
Cons
- Limited to agreed-upon value. The payout is based on the value you agreed on when the policy was issued, which might not cover the full cost of a replacement if prices have gone up.
- Partial coverage for everyday claims. If your roof is damaged but not destroyed, you may find the stated value doesn’t cover the full cost of repairs. This could leave you paying out of pocket if repair costs exceed the stated value.
- Uncertainty with older roofs. If your roof is older, you may find the stated value is quite a bit lower than the cost of replacement, meaning you could face a gap if major repairs are needed.
Which Roof Insurance Option Is Best for You?
The right choice for your home depends on a few key factors:
- Age and condition of your roof. If your roof is newer or in good shape, stated value might make sense. You’re likely to get enough coverage for repairs or minor damage, and you’ll save money on your premium. However, if your roof is older or nearing the end of its lifespan, replacement cost coverage can be a safer bet, especially if you’re worried about the rising costs of materials and labor.
- Your budget. If you’re looking to keep your premiums lower, stated value is a more affordable option. It gives you predictable protection at a lower price. On the other hand, if you’re willing to invest a little more in your policy to avoid paying out of pocket for repairs or replacements, replacement cost coverage is the way to go.
- How much risk you’re comfortable with. Stated value coverage can be ideal for homeowners who prefer a more predictable payout and are comfortable with knowing exactly what their roof is worth. However, if you’d rather have the assurance your roof will be fully replaced no matter the cost, replacement cost coverage can put your mind at ease.
- Florida weather. In the event of a total loss from a hurricane, Ovation settles claims on a replacement cost basis, even if you have stated value coverage. So, if you’re primarily worried about big, catastrophic storms, either option should provide you strong protection.
Are you still unsure which option is best for your roof, replacement cost or stated value? Ask your agent. It’s exactly the type of thing they can help with.
Roof Insurance: Know Your Options!
At Ovation Home Insurance Exchange, we want to make sure you have the right coverage for your home. Choosing between replacement cost and stated value for your roof insurance is an important decision, and there’s no one-size-fits-all answer. By understanding the pros and cons of each, you can make an informed choice best for your home, your budget, and your comfort level with risk.
If you have any questions, contact your agent today. Or, if you’re not currently insured with us and want to know more about your choices with Ovation Home Insurance Exchange, get a quote with us right now.