Adam Bensman (founder, Roofing and Solar Reform Alliance) explains what roof payment schedules (RPS) are and why they effectively function like ACV (actual cash value) policies despite marketing. He defines RCV (replacement cost value) vs ACV with a used-car analogy, walks through numeric examples (e.g., $20,000 RCV, $5,000 deductible, 65% at 10 years → homeowner nets $8,000) and highlights practical consequences for homeowners and contractors (coverage gaps, need for financing, bundling with solar).
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Roof payment schedules. Everything you need to know if you're going through a roofing claim. Hey, my name is Adam Bensman, founder of the Roofing and Solar Reform alliance. And if you're new here, welcome. If you're not, welcome back. Everything I do is designed to help roofing and solar contractors give an amazing experience to homeowners so we can outgrow and out compete the rest on a mission to stomp the scum out. The very scum that's featured in the news, that's given roofers a terrible reputation and, and why 80% of homeowners sadly don't trust contractors who serve them. My purpose in making this video, because, by the way, I'm not a licensed public adjuster or an insurance agent. I'm not interpreting the insurance coverage that you have, but I want to make a video that communicates this very common roof payment scheduler, rps, or often called the Roof Payment Schedule Endorsement, to help you really understand what you're going through. Because it's not as great as you think as they make it sound. That's good marketing right there. So first what we're going to do is break down the most common of the past insurance coverage plans to then an even more common one and then the new RPs. So let's begin. First, you're going to hear some acronyms. I'll make it all make sense policies of the olden days, and again, they're still exist at some point is called RCV or Replacement Cost Value. Okay, what this means is you get the new price. If your roof's 10 years old and it gets damaged and roof's 20 grand, they pay you 20 grand versus an ACV policy, which is the actual cash value. And this is the used car price. So let's use a used car analogy. If you buy a brand new Ford F150 and it costs you up $65,000, well, in five years, let's say it's parked on the street, someone runs into it, luckily no one's hurt, but the vehicle is totaled. The insurance company is going to say, hey, well, we're not going to buy you a brand new vehicle because. Because now that brand new truck is $80,000 because, gosh, the price of vehicles has gone gangbusters. What they're going to do is say, okay, well you bought it new. And then based on its trim level, which the options it has in the miles and the condition, that vehicle is not worth 65 grand, certainly not worth 80. That's worth about $38,000, which means you can go out and buy a similar vehicle the same year, same miles, et cetera. So that's actual cash value. Now, in terms of roofing, I'm going to use an example here and then we'll get into the RPS in just a moment. Okay, let's say a roof claim is $20,000. 20K. Okay. What I mean by that, a roof claim is the roof is damaged by hail, wind or hurricane and the homeowner has the insurance company out and say, hey, we're covering your roof. The RCV replacement cash value is $20,000. So your roof is 20,000. They're going to have a $20,000 claim. Now, of course, your contribution or the homeowner's contribution is their deductible. There are many laws in many states. This isn't nationwide as of yet, although I think it will be, that are requiring homeowners to pay their deductible and or requiring contractors to include proof of payment of the deductible to fight rampant fraud that's been in the industry. So the homeowner may not get a check for 20,000. They're going to have to pay their deductible. For today's conversation, okay, we're going to call this deductible $5,000. Now, in some markets that's low. In others it's high. But. But the reality is roof deductibles have gone up over time. Now, if you have an acv, your actual cash value policy, let's say that your roof is about 10 years old and they're going to pay, I don't know, let's call it $13,000. They say, hey, your roof's 10 years old. It should have lasted 30 years. So we're going to prorate its age and condition and we're going to call it $13,000. So that's what your claim is. And again, you're going to also pay your deductible and for Today's conversation is $5,000. Which means your net payment that you'll receive is $15,000 on the RCV policy versus $8,000 on the ACV policy. Okay. You can see why one would want an RCV replacement cost policy. Now, this is where roof payment schedules come in. Okay. Roof, which also is RPS roof payment schedule. Often with fantastic marketing, they will say you get the RPS endorsement. Roof payment schedule. Endorsement, endorsement. Sounds great, doesn't it? But I'll let you decide if it's great after you see how it actually Works. Now, based on an ACV policy, they look at age and condition of the roof similar as they would by appraising a used car, but in a roof payment schedule, they don't look at it. They actually predefine it in this little handy table that they have. And they say at X years, we pay X percent. And this again, as the age goes up, the percentage goes down. Okay, so at one year they're going to pay more than if they were 10 years. Okay, so it's predefined on this table. For example, let's say you have a 10 year old roof and it says at 10 years, we pay 65% of the RCV or replacement cash value. What will happen? We have a $20,000 RCV replacement cash value claim. Then they're going to say, well, the roof's 10 years old. Let's defer to the roof payment schedule. We take a peek at it. Your roof's 10 years old, we pay 65% and that is $13,000. Make sense? Oh, seeing some similarities here. Interesting. But then the homeowner has to pay their deductible. So this is the rcv, that's the roof payment schedule. And then we have the deductible that's going to come out. And the homeowner's deductible is $5,000, which means at the end, the homeowner is going to get $8,000. Huh. Do you guys see the similarities and how this claim breaks down from a ACV policy? It's very similar because it is virtually identical, which is why the roof payment schedule, Roof payment schedule endorsement is a really clever marketing way to say you have an ACV policy, but we're just spelling it out using different language. So what this means is that a homeowner who has a roof payment schedule or an ACV policy, as the age of their roof increases, the amount of coverage they would receive decreases, which means how much it will cost the homeowner to actually replace the roof, which will continually go up over time. So whether you're a homeowner or contractor going through this, in this example, you would leave with $8,000, meaning you are $12,000 shy of a new roof, which means you unfortunately, are responsible for bridging the difference. Now, remember homeowners who then say, hey, I don't want to do the roof, I'm going to actually just keep this money because in a million years I couldn't come up with $12,000. Are you kidding me? To get my roof replaced. The then the insurance company, and this is the way it works is if you pocket this money but don't do the roof, then the roof is no longer insured because you can't collect on an insurance claim twice. That'd be like someone hitting your car totaling it. You continue driving it, someone else hits it, they can't be like, well, my car got totaled again. Like, no, we already paid for a new car, our portion of it, but you didn't do the work. And this happens. I've run into it personally, where a homeowner had received payment and didn't do anything. So what you would likely want to do as a contractor again, or as a homeowner contractor, you want to be able to offer incredible financing solutions to your homeowner to make that $12,000 difference as minimal as possible and the most attainable to fit their cash flow needs, whether it's same as cash financing, 5, 10 year options, et cetera. Okay, now or potentially it was a great time to look at doing roof and solar together, because doing solar with a new roof is the best time to do it. Which also opens up solar financing loans which are much longer term and lower rates. Believe it or not, it's actually cheaper month to month to do the roof and solar together as it is to do just the roof if it's financed. Okay, why? Even though it's counterintuitive, it sounds more expensive because the loan terms are much longer and the interest rate is lower. And we're making their electric bill virtually go away. So any increase in their monthly payment gets washed out by that electric bill getting minimized or nearly eliminated. It doesn't go away 100%, but it nearly does. Now this, my friend, is important for you to understand because as you either review policy coverage options or go through the claim, you now know what you're up against. I hope this video helps, but hey, don't leave yet because you might have more questions. You might say, hey, well, how does, how does insurance money work? The paperwork they send me is so confusing. And if that's you, I have a video that you're going to jump into right after this and that breaks down how roof insurance money works. Thanks for hanging with me on this video and I'll see you in the next one.
