Is newer always better? When it comes to insuring roofs, it is.

Many home insurance companies are becoming more restrictive when it comes to roof coverage. Key examples:
  • Refusing to renew existing homeowner insurance policies on houses with roofs older than 20 years without passing an inspection; failed inspections often require roof replacement prior to renewal.
  • Not writing new policies for homes with roofs over 20 years old.
  • Paying actual cash value for roof replacement for older roofs.

As expensive as it may be to replace a roof, you may have no choice if doing nothing would cost you your home insurance policy, according to Chip Merlin, president of Tampa-based Merlin Law Group, P.A.

"Insurance companies are generally tightening underwriting requirements for older homes in general -- and then specific homes where there has not been a replacement of roofs, plumbing or electrical. Roofs are the biggest issue," says Merlin. "Generally, in geographic areas where the demand of insurance exceeds the insurance company's appetite for risk, the greater the underwriting criteria come into play. Florida is such a state, but we are also seeing it along all coastal areas and in areas where hail damage is most prevalent."

Merlin notes that while some companies are tightening inspection requirements and requiring homeowners to cover the cost of these inspections for renewals, most insurers are simply refusing to write new policies for homes with roofs older than 20 years. (See " 7 types of homes that are hard to insure.")

"The trend is to require an older roof - 15 to 20 years plus -- to have an inspection to get a renewal. This is probably a good policy because it promotes better maintenance and reduces needless loss," says Merlin. Managing Editor Des Toups says new homeowners whose roofs passed muster with a home inspector or lender may find they don't measure up to an insurance company's underwriting guidelines. "It's a nasty surprise, especially if you were stretching to buy a house in the first place," he says.

New restrictions, leaner payouts

According to Scott deLuise, president of Matrix Business Consulting in Broomfield, Colorado, many insurers on the West Coast are adding new endorsements upon renewal for the area's popular wooden shingle roofs.

"There are different variations. Insurers are trying to limit liability for all types of roof claims for wind or hail or anything other than fire. The only way they can do that is by changing types of coverage. Here in Colorado we're seeing wooden shake endorsements, and what some companies are doing is only insuring them on an actual-cash-value basis, meaning that those roofs are only covered for what they're worth at the time instead of for the cost of replacement," says deLuise.

A wood shake or shingle endorsement is a written document attached to an insurance policy that excludes or restricts coverage of roofs made of wooden shingles or shakes.

Another example of the shift to actual cash value from cost of replacement: Allstate launched a program in 2012 in Oklahoma in which policyholders with roofs more than 10 years old receive actual cash value for roof replacement. What that means is homeowners have to pay the bill for expenses beyond the claim payout for damaged roofs that have depreciated value. Allstate is gradually expanding the program nationwide.

DeLuise has also seen many companies limit appraisal for wind and hail roof damage during the claims process.

If the policyholder demands appraisal, what insurance companies are doing is trying to limit the scope of the appraisal to damages that they've agreed to instead of all of the damage that the insured might find. "This effectively guts the appraisal clause in the policy. For example, if you have a metal roof and file a claim for hail damage, they may come back and say that the damage wasn't caused by hail but by wear and tear due to age," says deLuise.

He also says he's seeing new cosmetic roof exclusions many client policies, meaning that the homeowner must pay for any damage that the insurance company deems as cosmetic.

"So for example if you have a metal roof and it gets hail dings in it, they won't replace the roof because that's cosmetic and doesn't limit the functionality of the roof. I think that's a really bad criteria because it's so subjective," says deLuise.

Older roofs have higher risk

Why are older roofs more risky to insure?

Gerald Delaune, senior building envelope consultant at Childress Engineering Services Inc. in Richardson, Texas, has seen many roofs damaged due to construction defects as well as hail damage, wind damage and debris strikes during storm events. It's a complex issue, but he says older roofs are almost always compromised by poor maintenance, moisture and decay of components, making them more susceptible to storm, fire and other types of damage. Although every area of the country carries its own risks, some parts of the country, which are more susceptible to extreme weather events, are more at risk than others.

"What causes roof damage? The obvious answer would be hurricanes, tornadoes, supercell thunderstorms (hail and wind) and in some cases snowstorms," says Delaune. "The big question is what type of roof is best for this particular structure and climate. Cold climates make the materials brittle. Hot, humid climates have storm events and high ultraviolet exposure that damages roof membranes. My opinion would be that homes in hot, humid climates, such as in the southwestern and Gulf Coast states, are more at risk of roof damage."

Even before disaster and old age strike, the quality of many older roofs may have been poor to begin with due to poor construction. This lack of quality in building can be a surprise headache for homeowners come inspection time.

"Many people do not realize that the roofing industry has a problem with quality workmanship. It could cost thousands of dollars to fix problems from the original construction and from serious wear and tear issues, and if you do not fix the problem, you may not get insurance coverage or your policy may get cancelled," says Merlin.

Rebuilding a roof that's lasted 20 years

Do you have to put on a new roof after 20 years? Or can you simply repair it? Delaune says that although there are a lot of factors that come into play with roof system life expectancy, such as the roofing material and moisture levels in the roof system, replacing a roof may be the best option. However, because it can cost anywhere from $9 to $15 per square foot, he suggests that homeowners visit the Roof Consultants Institute's website to find a qualified roof consultant to assess the roof or National Roofing Contractors Association (NRCA) to find a qualified roofing contractor before making this major investment.

"If you have a roof that has lasted 20 years, then you've probably exceeded the roofing membrane life expectancy. Chances are that at that point, there are issues within the roofing system that cannot be seen (such as moisture within the system) which could potentially deteriorate the deck and that it would be worth your money to replace the roof," says Delaune.

Experts agree that the trend of denying and restricting coverage for older roofs will likely continue. So what should you do if the insurer denies your claim or limits coverage for the roof?

Deluise suggests that homeowners read their existing or proposed policy carefully to see what the limitations to coverage is on roofs.

"Coverage scope and exclusions are a big deal. Ask another insurance company for a policy bid at renewal if it contains a wood shake endorsement or an exclusion for roofs over 20 years old," says deLuise. "Also, have a good quality roofer inspect your roof and get a written report so that you know the condition before any damage occurs. That way, if wind or hail strike your house, you can show the insurance company that there was no pre-existing damage. You can also request a cost estimate for replacing the roof so that you can decide if the cost of a new roof outweighs the risk of being denied home insurance coverage."

Toups reminds homebuyers and owners that underwriting standards differ greatly. "One company may reject you, and another might just raise your premium, and a third might not even ask," he says. "This is why you shop around."

Homeowners with autos should compare bundled home and auto quotes, Toups says. "You typically get a discount on both policies," he says. "If you switch your homeowners policy you could lose your bundling discount on the auto side as well."