Aug 5, 2024

How Insurance Payments Flow in a Roof Replacement: A Complete Guide (Including Deductibles and Supplements)

When it comes to a roof replacement covered by insurance, understanding how funds flow can make the process feel much less overwhelming. From initial insurance payments to final contractor invoices, the financial journey involves several steps, especially when supplements or deductibles come into play. At Oz Home Services, we aim to make this process seamless for our customers while ensuring all parties involved are on the same page.

Here’s an in-depth look at how the money flows in a roofing deal, including how deductibles are handled and what happens when supplements are needed.


The Standard Flow of Funds in a Roofing Insurance Claim

Step 1: Initial Insurance Payment (ACV)

Once your insurance adjuster inspects the damage, they calculate two key amounts:

  • Actual Cash Value (ACV): The depreciated value of your roof, based on its age.

  • Replacement Cost Value (RCV): The full cost to replace the roof, factoring in today’s prices.

The insurance company releases the ACV payment first. This amount is sent directly to you, the homeowner. This initial payment is intended to help you get started on repairs or replacements.

  • Funds at this stage: Insurance company sends ACV payment to the homeowner.


Step 2: Starting the Roof Replacement

With the ACV payment secured, Oz Home Services begins work on your roof. This phase may also include ordering materials and scheduling crews. The ACV funds may be applied toward these initial costs.

If unforeseen issues arise during the replacement, such as hidden decking damage or additional repairs, a supplemental claim may need to be submitted (details below).

  • Funds at this stage: ACV payment is used by the contractor to start the project.


Step 3: Submitting the Final Invoice

Once the roof replacement is completed, Oz Home Services provides the insurance company and homeowner with a final invoice reflecting the total project cost, including any additional work approved during the process. This invoice request the remaining RCV payment. This payment covers the difference between the ACV already paid and the total cost of replacement.

  • Funds at this stage: The insurer releases the remaining RCV funds to the homeowner or directly to the contractor.


Step 5: Handling the Final Payment

After the RCV payment is issued, the homeowner uses it to pay the remaining balance to Oz Home Services, ensuring all parties are fully compensated. Any outstanding amounts beyond the ACV and RCV payments (such as the deductible or additional agreed-upon work) are also settled at this time.

  • Funds at this stage: Homeowner pays the final balance to Oz Home Services, including any remaining deductible or uncovered costs.


How the Process Changes When Supplements Are Needed

Sometimes, additional damage is discovered during the replacement process that wasn’t initially accounted for by the insurance adjuster. For example, there may be hidden decking issues, or local building codes may require upgrades like additional underlayment or ice-and-water barriers.

When this happens, Oz Home Services submits a supplemental claim to your insurance company. Here’s how it works:

  1. The contractor identifies the extra work needed and documents it with photos and detailed descriptions.

  2. This information is submitted to the insurance company for approval.

  3. The insurance adjuster reviews the claim and may conduct another inspection if needed.

  4. Once approved, the insurance company releases additional funds to cover the supplemental costs.

  • Funds at this stage: Insurance company releases supplemental payment to the homeowner or directly to Oz Home Services, depending on the policy.

Supplements ensure your roof meets safety standards and local codes without additional financial strain on you.


Summary of Funds Flow

Here’s a simplified view of the money flow during the process:

  1. Insurance to homeowner:

    • Initial ACV payment.

    • Remaining RCV payment after final invoice submission.

    • Supplemental payment (if applicable).

  2. Homeowner to contractor (Oz Home Services):

    • Deductible payment.

    • ACV funds applied toward initial project costs.

    • Final payment from RCV or personal funds for uncovered items.

  3. Contractor to supplier/workers:

    • Funds received from homeowner used to pay for materials and labor.


Final Thoughts

Understanding the flow of funds in an insurance-covered roofing deal ensures a smoother process for everyone involved. At Oz Home Services, we work closely with homeowners, insurance companies, and adjusters to keep everything on track—from the initial claim to the final payment.

If you have roof damage or need help navigating the insurance process, we’re here to guide you every step of the way. Request a free inspection or schedule a consultation today to get started. Together, we’ll ensure your roof replacement is efficient, transparent, and stress-free.