How to Read The Insurance Estimate For a Roof Claim & How it Can Help You Sell Even More!

How to read an insurance scope of loss. That's the estimate that the insurance company sends to the homeowner after the adjuster has been out. Got one here from State Farm, one from nationwide and one from farmers. And in this video I'm going to be teaching you how to read these scopes of losses. So when you sit down with a homeowner, you know exactly what's going on. Now listen, a few things to get out of the way. I'm not the scope guy, alright? I'm not the supplement person either. But what I do know is this, this video has been highly recommended and I've dragged my feet on it because hey, everything I do in this channel. Channel is designed to help you develop a personal sales strategy to smash your income goal. So what in the world is reading a scope have to do with that? Well, I realized that for you to know how to read a scope whether you're brand new or even seasoned because heck, it took me a bit when I was new to really understand all the ins and outs and how the insurance companies do it differently is all about confidence. Because I vividly remember sitting down with my first few homeowners and I'm sitting there going through these line items and I see one number that says the RCV here and it looks different on the next one. And then the homeowner says, well, the insurance company already took out my deductibles so I already paid it. And all these little questions come up and they caught me on my heels. So in this video I'm going to be teaching you how to make sense of all this, but most importantly, how to use this as a confidence building tool. And some tips to help you close deals as you review this paperwork. Ready? Let's jump in. And if you're new here, my name is Adam the roof strategist. Click that subscribe button because everything I do on this channel is to help you develop a personal strategy to smash your income goal. So first things first, a homeowner should let you see this. Some of them won't. They want to play their cards close to their chest. I've done a video on how to get the insurance company, excuse me, the homeowner to show you the paperwork from the insurance company. And there's a link to that in this video up here. All right, now the other quick thing, even in this nationwide cover letter which I've by the way, you'll notice black covering. That's just to protect the privacy of the policyholders and the adjusters from these scopes so it says, if you choose to hire a contractor or vendor to make replayers, please provide this estimate to them. They even tell you to. So now that you know how to get that paperwork in front of you, if you come into the claim a little later, then you're ahead of the game. And now we're going to talk about making sense of all this stuff. Now, you'll notice two things. One is that almost all of these, and I'm flipping through them here, are going to look pretty much the same. So you've got this one here from farmers, you've got this one here from State Farm, and then you've got this one here from Nationwide. They all show the same line items in the same kind of breakdown, as we might say. But there is some subtle nuances between them. That's how they summarize everything. Now, let's cover some basic groundwork first. Even though the insurance company called this an estimate, ultimately it's not. Now hear me out. The reason I say it's not an estimate is an estimate usually goes through and you are estimating how much it might cost to do a project or, okay, I could replace that roof for, I don't know, 15 grand. That's an estimate. What this here is, is truly an assessment. The reason I push this language is because when you talk with homeowners about estimates, and even though nationwide refer to it as an estimate, your job is to rewire the mind of your customer to understand that this is an assessment. The reason I say assessment is because ultimately the price is fixed. You should not care about the price because the insurance company is simply going to go up there. They're going to item what's on the roof, what needs to be accessed to remove this, to get to that, what needs to get done for the installation. And it's very objective. Okay, you have to tear off the shingles, you have to replace the shingles. We're going to pay a little more because it's a two story. There's this much drip edge, there's this much ridge vent, there's these many roof vents, there's five pipe jacks. It's simply a game, so to speak, of identifying what's up there. And then we plug it in to the industry standard software, which is called Xactimate. Most insurance companies run on Xactimate. Those that don't use a program called Symbility. Conceptually speaking, this is the same process and the same presentation for the homeowner. The only thing that really differs is the language that they use and how they put it together, but they all work the same way. Go up there, assess the damage, take photos, document the square footage, linear feet and counting the accessories on a roof, plug them into this program with Xactimate. These price lists are updated every month by zip code to reflect the changes in material and labor costs. So ultimately the game is fixed no matter who the homeowner chooses which all of these cover letters even state, you can choose any one that you want to do the work. Okay. And I highlighted them. I'm going to skip digging through here to say that or excuse me, to read you that, but they do say that in here you can choose anybody. And the reason for this is that it is ultimately fixed. The homeowner should not be worried about the price. The price is simply a byproduct of what the insurance adjuster or insurance company plugged in here saying was up on the roof. But you might find some discrepancies like they skipped paying for starter or they forgot to pay for ridge cap or ridge vent, or they miscounted pipe jacks or they didn't notice that it was a two layer roof instead of a one layer roof. So that's why we never want to focus on, excuse me, estimates. We want to focus on the assessment, which is objective. That's why many adjusters can travel all across the country and it's the same process. Go up, measure, input, here's the amount and that's what gives the homeowner the option to choose any one that they like for the project. Now for more on that, watch this video on breaking the emotional attachment of money and focusing on assessment over price. And this is going to help you overcome the inevitable objection question. So let's jump in. I'm going to start here with this nationwide claim because like I said, they all look virtually identical. There are some nuances. So first we have on this far side what is called the line item and they're even numbered 1, 2, 3, 4. So what this means is the actual item, the name of what it is for this one, it says tear off, haul and dispose of composition shingles. Okay, easy. We know what that means. They got to take shingles off, then they're going to pay for felt and new shingles. So roofing, felt, synthetic underlayment and laminated composition shingles with felt. So you have the line items here and next to them is the quantity. 24 square, 19 square. You'll notice the tear off is always lower than the put back or replacement because we have to factor in waste, generally somewhere between 10 and 15%. So we have our line item stating what it is. Then we have the quantity that's in. That's a measurement. It is completely objective. All right, we have to remove 21.62 square, that's the actual size of the roof. But then we're going to put back 24 square because there's waste, a waste factor involved. Do you follow? So again, completely objective we have on our line item and then our quantity next to that is the cost per unit. I generally that's really not super significant for anyone. The homeowner don't really look at it very much and it doesn't really mean anything to you. But that's the breakdown for complete transparency from the insurance company. Next to that is tax. Now you're going to notice in this tax column that not every single item has tax. Now why is that? Because we cannot tax labor. So you'll only find on anything that is a labor charge, like removing this top one, there's no tax. But beneath it, the felt and the shingles, there's tax involved on those two items. So that's the tax. Then we have RCV which stands for replacement cash value. Now if you haven't done watch my video, I'm going to put a link. Replacement cash value, that's what that roof is worth today. Rcv. And if you didn't see my video breaking down how insurance money works, click here to watch it. Rcv, replacement cash value. What that roof is worth in today's time. All right, because material and labor fluctuate, meaning they go up on a pretty regular basis. But the homeowner's not going to receive the RCV quite yet. And I'm going to explain that in a minute. But that's the total cost once the homeowner does the work. So these are line item each total cost in relationship to the line item. Okay, follow. Alright. Then we have average age, life and condition. And then this one says age, life and condition on State Farm you'll see it up there. But then, excuse me, on farmers. And then on State Farm it says age, life and condition. Just spelled out differently so you can see pretty much the same thing. Now I'm going to use this one as an example. You'll notice here at the top the shingles say under age, life condition 19. Where are we at 19 years old out of a 30 year roof. So using the analogy of a car, a 2015 F150, top of the line, use round numbers, 50 grand right off the Lot brand new. But if it gets totaled today, and right now it's 2020, coming on 2021. It is now a five year old vehicle with some miles on it. So it's not worth 50 grand, worth 25. And that number is calculated just like any used car would be, based on mileage and condition, things like that and age. Mileage, condition and age. So what the insurance company does is they're going to say based on the age and the condition, we are going to depreciate. Meaning depreciation is a fancy word for saying, here's what it costs new, here's what it's worth today. And that's the name of this difference. This is the depreciation. Okay? So the depreciation will show a dollar amount or a percentage or both. Okay, and on here, this says an amount and a percentage. So it's 1000 bucks, 63.33% depreciation, which leads us to the ACV, which is the actual cash value. That's what the roof is worth today. And this, the sum of these parts, is what's going to make up the first check from the insurance company, which I'm going to explain a little bit more in detail. So you can see they all operate in roughly the same way. Okay? All of these. Now the only subtle difference is, is how they summarize each of them. And this can get a little confusing, especially because homeowners will say, hey, you know, I already paid my deductible because the insurance company took it off the estimate. No, no, no, no. You owe your deductible to whoever does the work. They withdrew it from the total value. Okay, so I'll give you an example. Farmers on this summary right here, they make it stupid simple. I love it. It says replacement cost, then it says less depreciation. So they subtract the depreciation. Then there's the actual cash value, less the deductible. And then this bottom number right down there, that's the first check amount, which means the settlement amount for this claim, which is a small claim total is 7,400 and change. But the first check is only for 3,700 bucks. Okay, you can see it right here. So how does this work? This means that the insurance companies cut a check to this homeowner for 3705 bucks and 11 cents. The policy deductible is 1500. So the homeowner is going to pay that to you when the job is done. Usually you'll collect that deposit. Some companies don't collect deposits. State laws vary. If you can, I highly recommend collecting it for a variety of reasons. And that's a separate topic for a separate day. But from a commitment, from the. From the job standpoint, cash flow and the health of the company, things like this. So if you can collect a deductible, generally we do the ACV or 50%, and again, abide by your state laws. Every law is different. Some states don't allow it, some states have a limit. You just need to be compliant with the state in which you operate. So the way that it works is you collect this amount, the homeowner pays you the deductible. When you're done, we invoice the insurance company on the homeowner's behalf. So we send them the invoices, which I'm going to read to you how they describe this stuff. Actually, I'm going to do it on the State Farm one and the Nationwide one to release the depreciation. That's what makes up the difference from what they were paid today. The actual cash value minus their deductible and the replacement cost, the brand new price. So they're going to release this amount, the homeowner then pays it to you along with their deductible. Here's where it gets fun. State Farm. I'm going to read straight off of their cover letter right here. It says, confirm completion of repair or replacement by submitting invoices, receipts or other documents to your agent or claim office. So that's how they know that the job is done. Then Nationwide goes a little bit further, by the way, and they even say this at the bottom. And I'm going to read this whole thing because this is going to help you when it comes to people who say, hey, well, can you eat my deductible? And the only way to do that, by the way, is fraudulent. It is fraudulent because it requires that you. Which I'm going to read the language to validate this. I have to dig it up here. It means that the insurance company will do this. Here's what State Farm says. It says if you select a contractor whose estimate is the same or lower than our estimate based on the same scope of damages we will pay based on their estimate, meaning the homeowner still has to owe their deductible. Okay, so if the. If this claim was 20,000 and there's a $2,000 deductible, the claim amount is 18,000. The homeowner might want you to try to do it for 18,000. But guess what? If you submit invoices for 18,000, they're only going to release 16, so that way the homeowner still owes the 2,000. The only way to cheat that system is fraud. And that would be by falsifying the documents submitted to the insurance company saying we did it for 20 when we in fact did it for 18. Nationwide is sick of this. In the language. It is unlawful to knowingly provide false, incomplete or misleading facts or information to an insurance company for the purpose of defrauding, attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of insurance company who knowingly provides false, incomplete, misleading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder will be punished. Okay, so the reason I share this with you is that we need to practice our business on the up and up. And this information, not only learning how to read this complicated piece of paper and knowing how to position it as an assessment and not an estimate and explaining how this process works, is going to help you win the confidence of homeowners. It's going to help you overcome the deductible question. It's going to help homeowners who may not want to show you the insurance paperwork hand it to you because you're focusing on assessment and not price. And most importantly, it's going to help you build confidence both at the door and at the kitchen table to walk through this process. And the more you do these to quickly spot items that might be missing. Like you'll notice on this one has ice and water shield on it. And I'm going to take a look at this one because there were some differences. This here asphalt starter is paid for. Starter is required on all roofs, but not all scopes will include it. This one doesn't and neither does the farmer scope. So when you learn how to read these, you can quickly audit or offer to walk around the customer's home with them to review this paperwork to spot any things that might be missing. And it will help you educate that homeowner that they ultimately can choose anyone. Because the game is fixed based on the assessment. You are not worried about price. You're worried about all the line items that should be on here that include what's damaged and what might need to be removed or replaced to access or do the proper installation. You're going to make sure that that information is submitted to the insurance company along with the right quantities because you and the insurance company are speaking the same language by using Xactimate or Symbility or whatever it is. Now if you need help with supplementing, there's great resources out there. I have a few names I can happily pass along from agencies that do this stuff for you and can help kind of train up your team as well. But again, I'm not the supplement guy. This video is designed to help you build confidence and to use these scopes and your knowledge is a powerful sales tool to make more sales and smash your income goals. I linked a few videos here to help you out and if you need to rewind and watch those, rewatch this video to get to those videos. And the last thing I'm going to say, just because our time here is done doesn't mean yours should be. So I have another playlist for you right here on the supplementing process to learn a little bit more and some easy ways to supplement without having to learn the ins and outs of Xactimate. So click here for the for the playlist on supplementing. And if you want more information for free and more free training, click here to download a free copy of my pitch Like a Pro Roofing Sales Training video library. We'll see you on the next one.