Roofing Contingency Contract- Why Do Roofers Use Them?
Roofing Contingency Contract- Why Do Roofers Use Them?
If you’ve been shopping around for a roofing contractor then you may have heard the term “roofing contingency contract” thrown around.
Before we can understand why roofers use them, it helps to understand what exactly they are.
In short, it is a legally binding contract in which you agree to work with a roofing company to do all of your insurance-approved work. Per the name, it’s contingent on the insurance claim being approved for the contract to hold together.
The main purpose from a roofing contractor’s standpoint is that they’re putting forth the effort to advocate to your insurance carrier so it’s only fair for them to receive the compensation from the work.
(Side Note: This is not to be confused with AOCs (Assignment of Claims) which is essentially turning the roofing company into the role of the homeowner/insured party.)
Now that we know what contingency contracts are, let’s discuss the pros and cons of using them.
What Are the Pros of A Roofing Contingency Contract?
Before you write them off as “all bad” there are some positives that come with using a roofing contingency contract.
For one, the roofer is further incentivized to do a well-documented and thorough inspection of your home. This includes taking detailed pictures of the damage, meticulous supplementing, and putting together a strong case for your claim.
The roofer is now in your corner and fully committed to advocating for your claim.
Additionally, when roofing contractors are slammed with work (think hail storm) a contingency contract will prioritize your home. Oftentimes during a hail storm, reputable roofers are backed up with work but the contingency will secure your position on their calendar.
Why do you want to secure a spot?
Certain insurance carriers have very limited windows from the storm date to make your claim. So if you can’t get on the books for your preferred roofer within the 6-12 month window then you may have to settle.
In short, if you’ve done your research about the roofing company inspecting your roof then you shouldn’t be too worried about signing a roofing contingency contract.
What Are the Cons of A Roofing Contingency Contract?
Perhaps the most obvious (or potentially) negative of signing a roofing contingency contract is that you’re legally bound to that contractor.
This is especially hard to swallow if somewhere along the way you realize you don’t like them. A homeowner may feel unsettled with the roofer’s communication- either with them or their insurance carrier.
There is one saving grace, however.
The roofing company has the first right of refusal to walk away from the contract. This may happen if they’re unsatisfied with the claim amount and/or they foresee a negative working relationship with the homeowner.
Even if you don’t like the roofer, you’re unfortunately tied to them. In most cases, a contract becomes final 72 hours after you first sign it. At that point, a roofer can release you from the contract only at their discretion.
Lastly, there’s a lot of ambiguity when you sign a roofing contingency contract. The Statement of Work (SOW) is very unclear until you finally hear back from the insurance carrier.
With that said, sometimes these contracts don’t specify what the roofing company does/doesn’t do and therefore they can take charge of the entire amount of work (even non-roof related items). For instance, if your insurance approves of a new deck then the roofing company may subcontract it to a contractor of their choosing instead of yours.
Some homeowners are fine with that, especially if they have a positive and trusted relationship with their roofer. If you aren’t comfortable with that then we suggest ensuring that the roofing continency contract specifies the type of work you’re agreeing to.
Are Roofing Contingency Contracts Binding?
Chances are you’ve signed a roofing contingency contract if you’re reading this post.
The answer, in short, is that yes it is binding.
There are a few ways you can walk away from this contract, however. We mentioned some of the ways above, but we’ll reiterate them here:
- If the insurance carrier doesn’t approve of the claim then the contract is null and void.
- If the claim amount is less than ideal then they may turn down the work. It has to be worthwhile monetarily in the eyes of the roofing contractor.
- Roofers may not pursue work if they believe the working relationship to be negative. In other words, if you are demanding early on then they may not want to work with you.
A roofer can sue for “loss profit” if you walk away from the contract and none of the conditions are met.
We encourage you first and foremost to ensure you choose a reputable roofer to inspect your home. Secondly, read any contracts thoroughly before you sign. Lastly, you should ask yourself, “Is signing this contract specifically what’s best for me at this time?” Different people will land in different places and a contingency contract isn’t necessarily always right or wrong.
If you have any other questions, please contact us or give us a call at (402) 889-3381.
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I just read the post on this website. I signed a contract with a roofer back in October 2018. He says he will call and does not. He is very unreliable and I don’t really trus the guy. How long is this contract good for before it becomes null and void or am I am his mercy until the work ever gets done? I live in Wisconsin.
Thank you, Amy
Hi Amy,
We’re sorry to hear you’re stuck in this situation with an unreliable roofer. Each company has varying amounts of time for a contingency contract, so we would refer to your contract (if you have a signed copy). Ours is 180 days so by our standards, you would be free and clear. Definitely document any lack of contact via unresponsive emails, unreturned calls etc., but we see no reason not to move on with your life.
I signed an inspection report with a roofing company that reads customer agrees to employ said company and all work will be done for insurance proceed safeguarding the homeowner against paying any more than their deductible.
Now this company wants more money than the Insurance and deductible, am i still obligated to hire this company?
Hey Janet,
While we’re not sure on what exactly the agreement states- if what you’re saying is true then it wouldn’t seem you’re obligated to this company. I would definitely consult a lawyer if you need certainty on the matter.
If a roofing contingency agreement does not include an end date what should we do? Does this vary by state?
I signed a contract for a free inspection and estimate. Reading through it now, it looks like a contingency contract. I asked them for an estimate even before the adjuster came to inspect, and they have not complied with it. They made promises to meet with my adjuster, and do inspection but they did not do so. Ive asked them for the estimate several times and said they work off on the insurance details, even though i was told they will give an estimate. As far as im concerned they have not done their part of the inspection thus could not provide me with one. I told them i cannot work with them if they cant provide what they promised. I received a letter from the company charging me a cancellation amount of $2500. If im not willing to pay, Im stuck with them. I need a new roof but i cannot work with them anymore. Please help me. Thank you.
Hi May,
Sorry you’re dealing with this situation. I think it does sound like a misleading and dishonest approach. We encourage you to contact a local lawyer on next steps.
We signed this type of contract and asked for a copy on 10/17/2020 after a hurricane. We have asked numerous times and still no copy. Now we are not wanting to go with contractor due to feeling he is a scam. He is screaming breach of contract because we don’t want to give him our insurance info. We have asked for a copy of contract in past 4 days numerous times and an estimate, to no avail. I’m
In Florida. Can I cancel since it has been a month, no copy or estimate and no work performed?
Hi Tina,
Sorry you’re dealing with this! Sounds like your gut instinct is probably right. We’re not familiar with the roofing laws in Florida so we suggest you contact a local laywer. Good luck!