While a home inspector is tasked with determining if the roof is satisfactory or near the end of useful life expectancy, that does not mean a roof, in good condition, will be insurable. Insurance carriers arbitrarily change the underwriting guidelines to reflect their exposure and re-insurance requirements.
You can't rely upon information provided by a seller concerning the age of the roof. Statistically, sellers believe their roof is newer than it really is. Sellers may have bought the home not understanding the real age of the roof.
Insurance carriers want to see building permits to determine the actual age of a roof. When a permit is not recorded or available, the carrier will often require an independent inspection and these inspections are often unfavorable as they are designed to protect the carrier. Small issues may result in a policy denial.
Roof replacement is expensive and therefore it is common for homeowners to rely upon a storm damage claim to get a roof replacement. It is not hard to understand the inequity in that to insurance carriers and all homeowners who have to share in these costs by paying increased premiums.
Currently, insurance carriers are denying coverage on roofs based on age and condition. Poor condition will result in a denial regardless of age. Using age alone, the general guideline for denial looks like this:
| Type of Roof Covering | Denial | Typical Manufacturer's Life Expectancy |
|---|---|---|
| 3-tab asphalt shingle | Over 10 years old | 20-25 years |
| Architectural shingle | Over 15 years old | 30-50 years |
| Metal roof | Over 20 years | 20-40 years |
| Tile/slate roof | Over 25 years old | 50 years |
| Tar/gravel | Requires underwriting decision | No rating |
| Membrane | Over 20 years old | 30-40 years |
| Wood shake | Over 10 years old | No rating |
| Other | Requires underwriting decision | No rating |
Currently, insurance carriers do not appear to give credit for higher rated asphalt or metal roof materials so a premium shingle or metal roof would not be an asset in obtaining coverage. Carriers simply do not care.
Many home inspectors research building permits online, but not all. If your home inspector did not, you should contact the local building department to get as much information as possible. Sometimes, roofs were replaced without building permits and you should understand this is a black flag for insurance carriers as they have no way of knowing if the roof was installed per building code. Often, carriers will refuse to accept the roof even with documentation.
Many insurance carriers will issue a policy based on the information provided during the application, but they reserve the right to re-inspect the roof later; often within the first 60 days. Should their inspection reveal issues or concerns, they have the right to demand you replace the roof or cancel the policy. Finding you have 30 days to replace a roof after closing is rarely welcome news. You may not have the resources to do so and in that case, you may be forced into a risk pool underwritten by your mortgage company and these fees are often 5-6 times what you are presently paying. Your monthly mortgage payment could increase hundreds of dollars. You may also be forced into accepting a high interest loan offered through the roofing company. Neither situation is good for you.
First, you should hire an experienced home inspector who will research building permits and alert you of any problems found.
Second, you should order a Wind Mitigation report and submit it to your insurance agent for review. Make the agent explain what risks you have regarding the age of the roof. Is it currently insurable? If so, when should I expect the carrier will demand a replacement? If replacement will be required in the short term, say less than five years, obtain an estimate for replacement so you know how to budget accordingly.
Third, recognize the value of the home is diminished by an uninsurable roof or one which is considered obsolete or near obsolete by an insurance carrier. You may have to pay to replace the roof and you should factor that into your purchase price. In today's sellers market where we have low inventory and heavy competition amongst buyers, sellers are reluctant to upgrade roofs; they figure that is your problem. Real estate comparables, including mortgage appraisers, rarely consider roof replacement in their analysis so you should ask yourself if the home will be worth the asking price with the cost of a new roof added on.
Fourth, the cost to replace the roof will most likely be way more than you expected. A simple roof on an average ranch style home can cost $10,000 to $12,000. Two-story, large, complex roofs can easily cost $30,000 or more.
Fifth, understand the insurance agent or the carrier will not provide any guarantee against future coverage. If you are buying a home with a roof over ten years old, you are at risk of losing coverage. It's not fair but it is what you will have to deal with.
The best advice is to obtain as much information as possible before you request a showing. Tell your agent you want to know the exact age of the roof and verify the information with the local building department. If no permit is on file, you may want to consider other homes if the seller is not willing to replace the roof.
Contact the professionals of Property360 today at (904) 503-9808 for any questions or to request your inspection in the Jacksonville, FL area.
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