The money the insurance company awards you is for the replacement of the roof. They know what a quality roof installed by a quality crew costs – they spend millions of dollars a year in replacing roofs, and they try to keep their costs down. There is no ‘fat’ in their assessment – they pay for quality as they do not want to spend good money on a marginal roof put on by a marginal crew.

Now read on to learn about insurance fraud and then scan down further to read up on insurance terms.

In the simplest terms, fraud occurs when someone knowingly lies to obtain benefit or advantage or to cause some benefit that is due to be denied. Make sure the invoice you submit to the insurance company is a true reflection of the work done. Anyone can report insurance fraud.

The following information is from the Georgia Insurance Information Service.

What is insurance fraud?
Insurance fraud is an attempt to obtain money from insurance companies by arranging a loss or accident or falsifying information on applications for insurance claims. Fraud can range from large, organized operations involving hundreds of thousands of dollars to an otherwise honest individual who overstates a legitimate claim.

What is the penalty for being found guilty of insurance fraud?
In most of its forms, insurance fraud is a felony. When caught, prosecuted and found guilty, most fraud perpetrators are required to make restitution and jail time is also commonly imposed.

What is the most common types of fraud cases?
Insurance fraud can be divided into three categories:

False claims for injuries

Arson for profit

False or intentional auto theft and physical damage

What is the insurance industry doing to reduce fraud?
The insurance industry is committed to reducing fraud by teaching claims professionals how to recognize suspicious claims and work with law enforcement and fire services. Insurance companies have units trained to investigate fraud.

What can citizens do to reduce fraud?
People who want to fight back against this crime should contact the following:
Georgia Department Of Insurance, 404-656-2060,
The Department's Insurance Fraud Hotline 1-800-726-6070,
The National Insurance Crime Bureau (NICB) toll-free at 1-800-TEL-NICB to report fraudulent acts,
The Georgia Arson Control Program at 1-800-282-5804 to report deliberately-set fires.
Callers may be eligible for rewards of up to $10,000 from Georgia Arson Control if their information leads to arrests and convictions of arsonists.

What effect does fraud have on the average policy holder?
The insurance industry estimates the size of insurance fraud to be about 10-15 percent of the premium dollar. This puts the yearly costs at an estimated $18 billion nationally. As fraud is reduced or eliminated, claims costs can be lowered and those savings can be passed on to policyholders.

Basic Insurance Terms

Replacement Cost Value (RCV)

Most home owner insurance policies are “replacement cost” policies. The replacement cost value (RCV) is the amount of money the insurance company has determined that will repair or replace your loss. The replacement cost value is designed to repair or make new your loss by replacing “same for same”. (three tab shingles for three tab shingles, etc)

INSURANCE COMPANIES KNOW WHAT IT COSTS TO REPLACE YOUR ROOF AND REPAIR RELATED DAMAGES.

This is their business; in fact, they often attempt to minimize their claim payouts. That is the reason most insurance companies request that the policy holder show the repair or loss summary to a qualified roofing company to make sure all repairs are addressed.

Deductible

Your deductible is essentially the amount of risk you, as the policy holder, decided to own (per claim). It is your portion of the loss or replacement cost.

Depreciation

There are two type of depreciation: recoverable and non-recoverable.

In the simplest of terms, recoverable depreciation is the amount of money being held back by the insurance company until they receive proof that your damaged property has been repaired.

The proof is an invoice for at least the amount of the Replacement Cost Value (RCV).

If you submit an invoice for less than the RCV, the insurance company will deduct the difference from the depreciation check. (We will replace your roof for the replacement cost value that your insurance company assesses.)

Non-Recoverable depreciation is an amount that represents the current value (prorated value) of your damaged property. I.e. if you have a 20 year roof, and it is ten years old, the depreciation amount would be 50% of the original value of the roof. Each insurance company has a different formula to determine this type of depreciation. In the end, non-recoverable depreciation is the amount of money you will never recover from the insurance company.

Actual Cash Value (ACV)

In simplest terms, ACV is:

Replacement Cost Value – Depreciation = Actual Cash Value

Initial Award

Your initial award or check will be:

Actual Cash Value – Deductible

Final Award

Your final check will be for the amount of recoverable depreciation, based on a true invoice totaling an amount equal to or greater than the RCV. This invoice is for the replacement of your roof. You pay for the additional amount greater than the RCV; these may be for shingle or ventilation upgrades.

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