Nashville, TN — “Claim denied” are two words many Tennesseans are hearing after the recent flooding from Hurricane Helene. This is primarily due to common flood exclusions in insurance policies. However, roofing experts are concerned that rejected claims will become even more common this winter.
New, lesser-known exclusions could significantly impact Tennesseans, potentially leaving homeowners stuck with costly repair bills. “We are hearing that many insurance companies are revising their coverage to exclude specific weather-related damage, such as ice dams, which are a common issue here in Tennessee that can wreak havoc on roofs and interiors during the winter,” says Penny Austermiller, President and CEO of Austermiller Roofing and Construction.
Ice dams are only one exclusion Tennessee homeowners need to be aware of. Hail damage is another exclusion being added to many insurance policies, as some insurers are now categorizing hail damage as cosmetic rather than structural.
Although hail is rare in the winter, spring will be here soon. Tennessee homeowners should prepare now to ensure they are covered, especially if they have a metal roof. “Metal roofs are particularly affected by this change, as insurers argue that the dents do not affect their functionality,” adds Austermiller.
Compounding these issues, many policies now reimburse damages based on actual cash value instead of the full replacement cost. With actual cash value, insurance companies only reimburse for the value of the damaged property at the time of loss, factoring in depreciation.
“Only reimbursing for cash value can significantly impact how much a homeowner pays out-of-pocket,” says Brent Goodman, a project manager at Austermiller who previously spent 16 years as an insurance adjuster.
“For example, if your roof sustains significant damage and is 10 years old, the insurance company may only pay out for its current value after depreciation, not the full cost of replacing it. This means you could be left paying a significant amount out-of-pocket for repairs or replacement,” explains Goodman.
Homeowners are caught off guard when their claim is denied for various reasons. Often, the issue starts when they sign the dotted line on their first policy, not fully understanding what is and isn’t covered.
Searching for lower premiums can also lead to unfortunate surprises. Insurance agents may offer reduced rates without clearly explaining the exclusions that come with them.
“Unless you’re familiar with insurance verbiage, it’s easy to misunderstand or totally overlook exclusions in your contract, leaving homeowners with unexpected gaps in coverage that could cost them tens of thousands of dollars,” says Goodman.
Even more concerning is the practice of quietly adding exclusions and changes during auto-renewals, which can catch policyholders off guard.
Though insurance companies are required to notify homeowners of policy changes, updates are usually sent via mail or email. Many people don’t pay close attention to these letters, leading to automatic renewals, assuming that coverage hasn’t changed.
“If you receive a letter or email from your insurance company, read it carefully, and don’t only rely on notifications. Periodically review your policy to ensure you haven’t missed an important update,” says Goodman. “Exclusions like ice dams and hail damage are newer additions that are becoming more common, so they might not be in your original policy. Overlooking one of these changes could turn a simple repair into a costly disaster.”
Adding to the financial strain, insurance premium increases are hitting nearly all policyholders nationwide. According to the Policygenius Home Insurance Pricing Report, from May 2022 to May 2023, a staggering 94% of homeowners experienced a premium hike at renewal.
“The combination of rising costs, unnoticed exclusions, and policy changes highlights the importance of proactive policy management. Reviewing your policy each renewal season and understanding its exclusions and terms can prevent a major financial headache in the event of damage,” says Austermiller.
Expert Tips To Help Homeowners Avoid Claim Rejection
Discovering that damage to your home is not covered by insurance is a homeowner’s worst nightmare. Luckily, many of these claim rejections can be prevented.
As winter brings additional hazards like ice dams and spring ushers in storm and hail season, Austermiller Roofing offers the following tips to Tennessee homeowners:
- Review your policy and ask about exclusions: Standard home insurance typically only covers damages caused by fire, lightning, and wind, but there are plenty of exclusions—some of which are newer.
In more recent months, many insurance companies have started adding exclusions for ice dams and hail damage, which are common in Tennessee. To avoid surprises, always review the fine print and understand the full scope of your policy.
Additionally, check when your policy renews and contact your agent 30 days before the renewal date to discuss any new exclusions or changes.
- Consider adding coverage for specific risks: Don’t wait until it’s too late. If you know your home is vulnerable to certain types of damage, it’s worth paying for additional coverage to protect against those risks.
Tailoring your policy now to include coverage for specific risks common in our region, such as ice dams, flooding, or hail damage, can prevent significant financial burdens later.
- Only work with a knowledgeable contractor: In the event of damage, your first call, even before calling your insurance company, should be to a contractor experienced in navigating insurance claims.
Austermiller Roofing’s team includes former insurance adjusters who can assist with the claims process, ensuring you’re not caught off guard and receive the compensation you’re entitled to.
- Be wary of low premiums: When selecting a new policy, choosing the option with the lowest premium is tempting. However, these policies often come with significant exclusions or reduced coverage.
Make sure to ask your agent detailed questions about what is and isn’t covered, and read your entire policy line by line, especially if the policy seems unusually inexpensive.
- Do not miss the filing deadline: Each insurance policy has specific deadlines for reporting damage and filing claims. If you fail to file within the specified time frame, your claim could be denied, no matter how valid the damage may be.
File your claim as soon as possible after damage occurs to avoid delays and potential denials due to missing the filing deadline.
- Never miss a payment: Missing payments on your home insurance or paying your premiums late can cause your policy to lapse. If this happens and your home sustains damage, your claim may be denied.
Late and missed payments can also affect your credit rating, which could lead to higher premiums in the future. Sign up for auto-pay and keep track of all payments to ensure your premiums are paid on time.
- Be honest and transparent: The nature and scope of the damage should always be accurately reported to your insurance company. Lying or withholding information can result in your claim being denied. Be as detailed and accurate as possible when filling out your claims form.
Your insurance company will send their own adjusters to assess the damage, so any discrepancies will be uncovered. This is another reason to hire a trusted and experienced contractor. They can ensure you properly file your claim, making a rejection less likely.
- Thoroughly document damage: Another reason a contractor should be your first call is they can help you properly document damage. It’s your responsibility to provide sufficient proof to your insurance company to support your claim.
This means taking clear photos and videos and keeping detailed records of all damage. Without proper documentation, your claim could be denied.
- Keep your property well-maintained: Most home insurance policies stipulate that homeowners must maintain their properties in good condition. Your claim may be denied if the insurer finds that damage occurred due to wear and tear or negligence.
To prevent damage caused by neglect, keep up with all maintenance and regularly have an inspector examine your home’s roof, plumbing, and other systems.
Connect with Our Experts for Additional Details
Winter storms are just around the corner, and spring storms will be here before we know it. We hope you will help us spread the word about these often unknown exclusions to help avoid situations like the one we saw homeowners face following Hurricane Helene.
Our expert roofing and construction team, which includes a former insurance adjuster knowledgeable on this topic, is available for interviews and further insight. For more information or to schedule an interview, please contact Stacy McCloud at stacy@aroluxe.com.