Get A Free Roof After Hailstorm – Myth or Reality?

Every Spring, I see roofing companies go door-to-door in my neighborhood asking to get a free roof. So, it was no surprise that a roofer knocked our doors this year. This is how the story goes.

Sales Pitch

Sir, I am from the “Roofing Company”. You neighborhood had a big hailstorm last week. We are asking people if they are interested in getting a free roof from us. We will inspect your roof and if we find damage, we will "work with the insurance company" to get it to pay for a new roof. It will NOT cost you a thing. YOU WILL GET THE ROOF FOR FREE. In return, we will get to do the job.

Analysis Using a Hypothetical Example

A homeowner has a 13-year old roof. It has been subjected to rain, heat, cold, wind, and storms over the years. The deductible with the insurance company is $1000. The current premium on the home-owners insurance policy is $600/year.

Scenario 1: Homeowner pays the deducible ≠ FREE ROOF

Roofing Company does the inspection. An insurance adjuster is called in to inspect the roof together with the Roofing Company. Seeing some damage, adjuster agrees to pay for the damages as per the going rates. Let’s say, it costs $8,000 to replace the roof.

Since the deductible is $1000, insurance company will pay $7000 and the homeowner will pay $1000.

Mathematically, what was promised as a FREE ROOF initially is not really free. The homeowner has to LEGALLY pay $1000 out-of-pocket for deductible. The insurance company ONLY pays $7000 and not the full cost.

Scenario 2: Roofer eats up the deductible = SO-SO QUALITY

Let's assume the Roofer eats up the homeowner's deductible (a big legal risk for both homeowner and the Roofer, but keep on reading  below).

Please keep in mind that the insurance company doesn't pay its full claim in one check. They typically withhold some money and pay only when roof is replaced AND the cost of replacing the roof is at least the estimated value or above.

If the final cost is lesser than the original estimation by the Roofer, then they will reduce the final check or not pay out at all. Let’s say they will pay out $3500 to get started and will withheld $3500 until the roof is finished.

Because the Roofing Company has promised a FREE ROOF, they send invoice to the insurance company $8000 and WILL FALSELY state that they have collected the deductible from the homeowner. When the work is done, Roofing Company asks the insurance company to release the remaining funds.

If you look closely, the Roofing Company just committed an insurance fraud by sending a false invoice for the improper amount. But, they also dragged the homeowner into the fraud because the homeowner went with it and had to sign claim papers with the insurance company. Both homeowner and the Roofing Company could get charged with a punishable crime if they get caught. Getting caught is just a matter of insurance company sending an auditor to the homeowner.

Some roofing companies work around the law by putting an advertising sign in the homeowner’s yard for a compensation equal to the homeowner's deductible. But, don’t be fooled with the discount (or the kickback) you might receive on your deductible.

You may technically get a FREE roof. But, since there is no free lunch, the Roofing Company will cut corners to keep their costs minimum or will do the job as fast as they can so they can move on to the other homeowners. Your deductible will be recovered by the Roofing Company one way or other and will reflect in terms of the quality of workmanship or materials used.

Because the Roofing Company is going door-to-door, you could also conclude that it is desperate for business. It may even be ‘fly-by-night’ roofing company from out-of-state. When you hire such a company, if the roof leaks, they may not be available to fix problems.

Since the primary sales method for this Roofing Company is to knock doors after a hailstorm, their business model is profitable only when they complete large volumes of roof replacements in a short amount of time. It is very likely that they will do this faster or cheaper to eat up your deductible by cutting corners.

Concluding Thoughts

Always remember that the purpose of insurance is to insure your losses against catastrophic disasters such as tornadoes, hurricanes, fire, large-scale water damage, etc. Some people naively conclude that the insurance company is always collecting money but not giving you anything back. The purpose of insurance is not to get your money back every now and then. But, the real goal of insurance is to get yourself covered for a once-in-a-lifetime natural or man-made disaster that would otherwise ruin your financial life.

Finally, remember that there is NO FREE LUNCH no matter how enticing the offer looks. There are always strings attached to free deals.

NOTE:

I know there are plenty of good, hard-working, honest roofing companies trying to make a living. This post is written to simply debunk the myth of a free roof and not to tarnish their reputation.