Homeownership 101: Home Insurance
Today, I am going to start a new series detailing the cost that you may not consider when you are starting on your journey as a new homeowner. The information provided during this series is not to talk down on homeownership, but instead, to make you aware of things that you may come up against. Let’s get started.
My husband and I purchased our home in February of 2023. You are required to do research and select homeowners’ insurance when you have a mortgage. At that time, I already had car insurance with Company A. They mentioned that if we added homeowners’ insurance, we would receive a discount all around. We like discounts, so we figured that using Company A was a good choice for us. Not to mention, they are ranked highly when it comes to their products and customer service. Our insurance premium came out to be $1,844.47. By the very next year, the premium jumped to $2,570.25. Currently, the premium is $2,745.81. A $901.34 increase in just two years of owning our home!!!
You can imagine the annoyance we felt seeing yet another increase. Our mortgage payment is set to come out of our joint account every month. At the time of setting up the automatic payment, we asked the bank to pull $1,800. This allowed the mortgage and escrow fees to be covered, but it also allowed us to pay a little more on our principal. Nothing worth mentioning, but still something. This year, we had to pay $1,250 to our escrow account to keep our monthly mortgage payment below the $1,800 automatic payment. If all of this occurred in two years, I can only imagine where it will be after five years.
My husband and I decided that we were going to look for cheaper home insurance. It made no sense to us to continue to be loyal to a company that has no issue with raising their prices. I have had loans with Company A and bank accounts with them for over 14 years now. None of that matters to their bottom line. They are not loyal to us, why be loyal to them?
Before we decided to leap into business with another insurance company, we wanted to have our roof looked at. At the time we purchased our home, the roof was 13 years old. It was in decent condition, but we had recently experienced hailstorms and other weather conditions that possibly caused damage. By the looks of the neighborhood, roof replacements were looking like a common thing.
We had an inspection on the roof to show that the whole roof was not damaged. There were some shingles that needed to be replaced, but nothing was too drastic. The issue came once we were told that the shingles on our roof are no longer manufactured. Therefore, if we wanted to replace shingles, they would not match the current shingles. We live in the state of Tennessee. Tennessee just so happens to have a roof matching law which states “If matching materials are unavailable or discontinued, the insurer may be obligated to replace the entire roof to ensure a uniform appearance.”
Initially, Company A did not research this law. They told us that the shingles that needed to be replaced totaled to around $400, and since our $4,020 deductible was more, this would be an expense that we would need to take care of ourselves. Because we were aware of the law, we reached back out and told them that this was unacceptable.
Company A then had another inspection completed and asked us to provide them with estimates of the cost of the repairs. We talked to three different roofers and they each provided us with an estimate. All of them told us that the entire roof needed to be replaced. The estimates ranged from $16,500 to $27,500 to replace the roof. Company A then came back to us stating that they would need to see that the roofers found more damage to honor the estimates. Again, the issue was not that more damage had occurred than what was initially stated. The issue was that the law stated the entire roof would need to be replaced.
After going back and forth for some time, Company A determined that only a slope needed to be replaced. Still, not the entire roof. They said that they were going to send one more inspector out, but that was the decision. The final inspector that they sent out also stated that it was clear that the roof needed to be replaced. Thankfully, this was the turning point. Company A issued an amount for the roof to be replaced. They determined that the replacement cost to us would be $12,310.65 minus the $4,020 deductible. That left us with a total of $8,290.65 to use towards replacing the roof.
Yes. Way less than any of the estimates that were provided to us by the roofers. This meant that we would be coming out of pocket to cover the rest of the cost. Fortunately, the same week that we received the approval amount, there was another house down the street from us getting their roof replaced. My husband spoke with that roofer and by God’s grace, he quoted us a price that was even less than the estimates that we received before. If we purchased the materials, the roofer would only charge us $3,500 for the labor.
We decided that we would be working with that roofer and my husband set out to purchase the materials. The materials cost us $5,317.75. Mid-way through the completion of the replacement, the roofer determined that we needed more materials. This added another $1,435.93 to our cost. More materials were needed because the square footage was more than what was quoted by the insurance company. More square footage also meant that the cost of labor increased by $500. That brings us to a total cost of $10,753.68. $2,463.03 more than what insurance paid for.
During the time of the roof replacement, we also encountered another major issue when it came to the check that we received from Company A. This situation is detailed in the post titled "Restricted Banking.” Please read that when you have time.
When all of this was happening, I made a post on Facebook stating that “Owning a home is GHETTO!” and this is why. It seems like many other people could relate. If you are going to embark on this journey of homeownership and find yourself needing a roof replacement, please make sure to:
Have an emergency fund established. A rule of thumb is to have 3-6 months’ worth of expenses saved. You never know when you will need to have a few extra thousand dollars to pay for increasing insurance or a roof replacement. Do not think that your home expenses will stay the same over the years. Costs will continue to increase.
Know the laws for your state when it comes to repairs such as this. Company A never told us about the law in Tennessee. We found this information out on our own. Had we not known beforehand, we would have believed that $400 was all we needed to make repairs and would have had a roof that was not uniform.
Be ready to face resistance. We were in communication with Company A back and forth for over a month before we finally received a payout. You cannot give up. The insurance company’s ultimate goal is to make sure that money remains in their pockets.
Get three estimates or more. You want to have a good range to provide to your insurance provider. As you can see, you still may face the possibility of them approving an amount that is lower than your estimates.
Continue searching for lower pricing after you have received your insurance payout. Had we not found another roofer, we would have had even more out of pocket expenses.
If you find yourself in a similar situation and would like help navigating through the process, please reach out to us at LCPB.
Even with all this craziness, God is still good and continues to be with us throughout the circumstances. James 1:2-4 states that we should “Count it all joy, my brothers, when you meet trials of various kinds, for you know that the testing of your faith produces steadfastness. And let steadfastness have its full effect, that you may be perfect and complete, lacking in nothing.” See you in the next post!