Allstate ‘House & Home’ Roof Surcharge Hikes Customer Costs

Allstate recently announced a new product that will impact rates its customers pay for homeowners insurance if they want their roofs repaired. The new House & Home coverage option will no longer cover the full cost of replacing damaged roofs if they’re older than 10 years.

Allstate Roof Coverage an Attempt to Increase Profits

Allstate CEO Thomas Wilson announced the company’s new approach to homeowners coverage called House & Home during a conference call with analysts on Thursday. He explained in the call that the new coverage is aimed toward increasing profits.

To further explain the company’s decision, Wilson provided an example to analysts. “People just don’t get their roofs fixed and then a hailstorm comes and we replace a $20,000 roof when we’re getting a thousand bucks from the customer and it’s obviously not a good trade.”

In order to improve company profits, the new coverage will pay only the “actual cash value” of a roof that needs replacing if it’s older than 10 years. If a homeowner needs a new roof, they will have to cover the cost above the depreciated value of the roof.

Homeowners Insurance to Increase with New Coverage

If those with homeowners insurance want to avoid paying out of pocket above Allstate’s contribution for full roof replacement (and have newer roofs), they can pay a surcharge for a rider that will cover the costs. But those who opt against the surcharge will only receive a check for the depreciated value of the roof.

“This new product gives us the opportunity to deal with roofs differently,” Wilson said. “That’s really the next game, and we’ll need to successfully accomplish that to get to our 13% return on equity by 2014.”

So far, House & Home only applies to customers who live in Oklahoma.

Allstate is not the first insurance company to push for an increase in rates in recent months. Since 2011 brought with it record disaster losses, insurance experts expect homeowners insurance rates to increase in 2012 for most customers.