One of my clients filed an insurance claim for hail damage, at the recommendation of a contractor, and it turned out to be a big problem when they decided to sell their home. The claim was filed, the contractor disappeared, and the owners forgot about the claim. A month later my clients received a check from their insurance company for $10,000, which they didn’t cash.

 A few months later they called me to sell their home. The sellers completed the Seller’s Property Disclosure Statement, which asks if any insurance claims have been filed, if there has been compensation for a claim, and if the repairs were made. They answered appropriately.

 A few days later the sellers accepted a purchase agreement and the buyer’s inspector estimated the hail damage repairs to be under $1000. The buyer got a second opinion from a contractor who estimated the repairs to be $1700. The sellers agreed to pass the $10,000, that they received from the insurance company, to the buyer in the form of price reduction and the buyer would make the repairs after closing.

 The buyer applied for homeowner’s insurance, and his agent told him that the roof claim was on record and the buyer would not be able to file any future hail damage claims until the roof was replaced. This concerned the buyer and he asked the sellers to have the roof replaced.

 The sellers contacted their insurance company and found out they didn’t have replacement coverage, but rather actual cash value coverage, because the roof was over 10 years old. The sellers requested a copy of the insurance company’s estimate, and it showed the replacement cost was $23,000 and after depreciation, and the deductible, the payout was $10,000.

 Replacing the roof wasn’t an option for the sellers as they didn’t have $13,000 to add to the $10,000 they received. The buyer and seller agreed to split the difference in the form a price reduction and the buyer accepted the roof as is. Filing this claim without understanding their policy cost the sellers more money than if they never filed the claim in the first place.

 Actual cash value for roofs over 10 years old is now common practice with many insurance companies. It is important to understand your homeowner’s insurance policy before you file a claim, and work with an experienced Real Estate Agent to ensure a successful closing, even when problems arise.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.