What is Scheduled Roof Payment by Farmers Insurance?

Farmers Insurance offers a scheduled roof payment option for homes insured under their Farmers Smart Plan policy. This payment structure determines how much the insurer will pay for roof replacement in the event of a covered damage. Here’s an overview of how scheduled roof payments work and what factors impact the payment percentage.

What is a Scheduled Roof Payment?

A scheduled roof payment is an alternative method some insurers use to settle claims involving roof damage and replacement. Instead of paying the full replacement cost upfront, the insurance company agrees to pay a specified percentage of the total roof replacement cost.

The scheduled payment percentage is determined ahead of time and outlined in the insurance policy. It is based on factors like roof type, roof age at the time of loss, and roofing materials. Older roofs will typically have a lower settlement percentage than newer roofs.

How Does Farmers Insurance Use Scheduled Roof Payments?

For homes insured under their Farmers Smart Plan policy, Farmers Insurance offers the option to have roof claims settled on an actual cash value basis or using a scheduled roof payment.

If the scheduled roof payment option is selected, Farmers will pay a set percentage of the total costs to repair or replace roof materials damaged by a covered peril like wind, hail, or falling objects. The remainder is the responsibility of the homeowner.

Some key things to know about Farmers’ scheduled roof payment structure:

• It only applies to damage to roof surface materials, not other parts of the roof or structure.

• The payment percentage is pre-determined based on the roof surface type and age. Farmers uses a roof payment percentage chart in the policy forms.

• For roofs over 10 years old, the scheduled payment is typically less than 50% of repair/replacement costs.

• The damaged roof must be actually replaced to get reimbursed based on the schedule.

• Increased costs due to building codes or contractor overhead/profit are not included in the scheduled payment.

• The policy deductible still applies and is subtracted from the payment amount.

What Factors Determine Scheduled Roof Payment Percentages?

Farmers uses several criteria specific to each roof to establish the scheduled payment percentage:

Roof Surface Material – Common materials like asphalt shingles, wood shake, tile, slate, and metal have individual payment schedules.

Roof Age – The older the roof, the lower the replacement percentage. Farmers determines age based on time elapsed since installation.

Estimated Useful Life – Typical life expectancy for the roof material also impacts payments. Longer-lasting materials like tile get higher percentages.

Single or Multi-Year Policies – For policies providing coverage for more than 1 year, the roof age may update at renewal, resulting in a reduced payment percentage.

Actual Condition – Farmers may adjust the payment percentage if evidence shows the roof was in worse condition than the age indicates when installed.

Geographic Location – Roof materials in certain environments like coastal regions may degrade faster, warranting lower payment percentages.

Scheduled Roof Payment Example

Here is an example of how Farmers’ scheduled roof payment works:

• House has a 15-year old asphalt shingle roof at the time of a hailstorm that damages a significant portion.

• A roofer estimates full replacement cost will be $15,000.

• The Farmers Smart Plan policy has a 20% hail deductible.

• Payment schedule shows 65% replacement for a 15-year old asphalt shingle roof.

• Farmers would pay 65% of $15,000 = $9,750.

• Minus the 20% hail deductible applied to $15,000 = $3,000.

• The final net claim payment = $6,750.

• The homeowner would pay the roofer the remaining $8,250 ($15,000 total minus $6,750 claim payment)

Benefits of Scheduled Roof Payments

There are some potential benefits to policyholders of having roof claims settled via a scheduled payment approach:

• Lower Premiums – Because it caps the insurer’s financial exposure, this option usually comes with reduced policy premiums.

• Faster Claims Processing – Much less time is spent determining the full replacement cost and settling depreciation.

• Coordination of Timing – Homeowner can choose when to replace the roof rather than on the insurer’s timeline.

• Avoid Underinsurance – Scheduled payments shift the risk of full replacement shortfalls to the policyholder.

However, there are also some drawbacks to be aware of compared to a full replacement cost policy:

• Out-of-Pocket Costs – Homeowner has to pay the difference between the scheduled payment and actual replacement cost.

• Contractor Overhead/Profit – These costs are excluded and add to the homeowner’s portion to pay.

• Building Code Upgrades – Any code compliance costs are also borne by the policyholder.

• Roof Age Risks – Older roofs mean lower scheduled payments, increasing out-of-pocket costs.

What Roofs Are Eligible?

Farmers’ scheduled roof payment option can be added to policies covering the following types of roof:

• Asphalt/Fiberglass Shingles
• Concrete or Clay Tile
• Metal including aluminum, copper, or steel
• Slate
• Wood Shakes or Shingles

Roofs made of unique or specialty materials may not qualify. Some key eligibility factors include:

• Roof needs to be in good condition when insured. Damaged or deteriorated roofs may be excluded.

• Old or high-maintenance roofs may require an inspection before qualifying.

• Historic or architecturally unique roofs may be ineligible.

• Mixed material roofs may have limitations or need an inspection.

• Flat roofs usually require a replacement cost policy, not scheduled payments.

Can You Switch to Scheduled Payments Mid-Policy?

For new Farmers policies, homeowners can select either replacement cost or scheduled roof payments for roof coverage. However, changing between options mid-policy term is restricted in most cases.

Some scenarios where Farmers may allow switching to scheduled roof payments include:

• At policy renewal, especially if the roof has aged another 5+ years.

• After a claim investigation reveals the roof is in worse shape than its age reflects.

• If recent weather events in the region necessitated more stringent roof underwriting.

• When the policyholder requests reduced premium in exchange for reduced roof coverage.

Other than policy renewal, changes to scheduled payment roof coverage usually require an inspection confirming the roof condition merits the switch.

Are Scheduled Roof Payments Right for You?

Scheduled roof payments reduce the financial risk for insurance companies, which translates to policy premium savings. However, homeowners shoulder more of the burden for full roof repairs after a covered loss.

Here are some tips for deciding if this option makes sense for your situation:

• Consider your roof’s age, type, and overall condition. How much life is left?

• Review Farmers’ payment schedule. What would you owe out-of-pocket for full replacement?

• Factor in your home’s value and budget. Could you afford major roof repairs if required?

• Remember you won’t get new upgrades covered, only replacement of damaged areas.

• Compare premium savings against higher costs you may incur in the event of roof damage.

For expensive premiums or newer quality roofs, replacement cost coverage may provide better protection. But the scheduled payment approach can be a viable option for certain homeowners looking to reduce their insurance costs.