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Roofing invoice example for Purchasing

you are about to learn a very powerful lesson for brand new sales people or seasoned pros on how to understand this insurance process and how this insurance money works to be able to communicate it really clearly to a homeowner so you can stand apart from them and win more business so think of this as a two-part video part one is an education and ground-up understanding and then part two is how to use this understanding as a sales tool because hey everything on this channel is designed to help you develop personal sales strategies to smash your income goal hey my name is adam the roof strategist and welcome if you're new here if you're not welcome back in a future video i will be breaking down these complicated insurance law summaries or scopes of loss and making sense of what means what again to help you communicate and close more deals but for this video let's jump right into how i explain this process so you can understand and experience it as i would explain it to a homeowner now before i jump into a little whiteboard session here i'm going to be doing the analogy the story about the homeowner's car now why do i use analogies i use analogies because we often get too in the weeds and too detail-oriented on this terminology when it comes to the insurance process or someone's home or roof and i want to break it into very simple stories that they're going to understand and darn near every homeowner that you serve has a car or a truck so let's make it about that ready let's jump in so mr homeowner let's pretend that you're driving a 2015 ford f-150 pickup truck and it was a top-of-the-line truck and when you bought it it was 50 000 by the way i'm using all rough numbers for easy math here okay so now it is now 2020 the time of this filming almost 20 21 so the vehicle is five years old now let's say something bad happens unfortunately don't worry everyone's gonna be okay but the car gets totaled someone crashes into it while it's parked and this gets smashed so now the vehicle is done well the insurance company they're going to do what they're going to cover it because you're insured right but are they going to write you a check for 50 000 no they're not because the vehicle is five years old it's got a bunch of miles on it so the insurance company owes for like kind like kind and quality okay which i'm going to show you how this comes into play here in a minute now to replace that that vehicle they're not going to get paid a 50 they're going to pay what it's worth today and what might that vehicle be worth today it is going to be worth for this conversation 25 000 okay so to get a truck with a 2015 f-150 low miles platinum whatever it is it's 25 grand but the insurance company isn't going to write the check for 25 000 because there's a deductible that's owed right so what is the deductible the deductible is the contractual agreement between the homeowner and the insurance company and it's the same no matter if it's a two thousand dollar loss or two million dollar loss now i know there are some new deductibles coming up which is a percentage of the claim or a percentage of of the home value even right so two percent of the value of the house but generally speaking that contractual agreement that's going to be a fixed cost cost so we're going to subtract it from this number so what is this number here this is what's called the actual cash value meaning what it is actually worth today this is a 2015 f-150 that was 50 grand but it's not actually worth that much now it's worth 25 000. so you'll notice that actual cash value has three letters a c v this is an important thing to learn acv is some insurance language that you're going to see come back later and this is what the roof is worth today the actual cash value now i'm about to switch stories here in a second but they're deductible for easy math let's just say is a thousand dollars so that homeowner when they got their insurance policy said i am committed to covering my contractually obligated portion of the claim so i can get this thing done it's a thousand bucks boom so there we go the homeowner then receives a check for 24 000 this is the first payment okay so quick recap what the vehicle was worth we're going to pay if it gets totaled later the actual cash value or acv what it's worth now then we're going to subtract the deductible and that's our first check now how does this relate to the roof let's jump on to the other side let's say that their roof for this conversation is was 20 000 brand new that's the cost to replace the roof replacement cost value which you'll notice just like acv has an initial of rcv so this homeowner's roof the same one who's driving this fictitious car has a twenty thousand dollar roof that's what it's going to cost to replace but here's the thing that roof is now 15 years old it was expected to last 30 years so it's half of its lifespan has been used up that is meaning the initial payment for the homeowner is going to be just like the vehicle not what it's worth sticker price new but what it is worth today is the actual cash value and because it's 15 years old that's about half the lifespan and you'll see this come up on these scopes of loss the amount of depreciation which they'll either do in a percentage or a number of years so if this was a 30-year roof and it's 15 years old then it's worth 10 000 which is the actual cash value or acv similar to the used vehicle and again the homeowner's amount might be their deductible okay deductible and for just for apples to apples comparison we're gonna call this a one thousand dollar deductible which means that the homeowner will receive a nine thousand dollar first payment make sense all right now one quick thing to know when it comes to roofing generally speaking at insurance claims and i know there are some exclusions here and there but some policies are going to only cover the actual cash value meaning the homeowner is kind of screwed because they got to come up with the extra 10 grand it's a very rare thing but you got to watch out for it you got to ask okay generally speaking they have a full replacement cost value coverage meaning the the entire roof will get paid for but then this begs the question of the homeowner says well i have nine thousand dollars only right now how do i get the rest and it's simple this is where it's a little different than car sales excuse me car claims because homeowners who might have gone through this process what might they be thinking i have twenty four thousand dollars so what do they wanna do they wanna go shop for a 2015 f-150 in better shape but they're gonna try to find it out for twenty four thousand they're gonna try to find it for like 20 grand and pocket the difference right that's in car claims but it doesn't work that way when it comes to their home the reason for that is simple and i'm going to explain it right now and this is so important for you to understand because the deductible objection i don't want to pay my deductible or you know help me uh save some money here that you're going to start seeing a lot and it's really important for you to understand how to overcome it so let me explain how it works right by the way so now that they've gotten this check for 9000 this here the difference between the acv and our cv okay so the what it's worth today versus what it's worth new this difference is called the depreciation depreciation just like a car a brand new car you drive it off the law it depreciates in value it goes down in value and what they what they name this difference of going down in value is the difference between what it's worth right now versus what it costs to replace it that's the depreciation and how they come up with the actual cash value okay depreciation of a vehicle fifty thousand dollars new it's it's a five-year-old vehicle you crash it it's not worth 50 grand it's worth 25 000 this difference here is the depreciation you follow all right now here's where it gets fun the insurance company will pay the full 20 000 minus the deductible okay to get the roof done so here's the catch the only way for that homeowner to receive the total rcv or replacement cost value is to complete the work to actually do it complete the work and invoice the insurance company invoice i'm just going to write insco for short in invoice the insurance company here's what that means to you hey mr homeowner you've received a check for the actual cash value minus your deductible okay now what we're going to do is assess the property make sure everything has been documented properly on what you the paperwork you might have received or will be receiving we're going to go ahead and facilitate all those repairs line item by line items you know exactly what we're doing and then what we're going to do is we're going to invoice the insurance company saying hey state farm or allstate or whoever it is american family we did this customer's roof please release the depreciation that is left over so once the insurance company sees the invoice and they say yup homeowner did the work they're going to write the check for the difference of that well minus their deductible so they're going to get another i shouldn't have done this i suck at math please correct me if i'm wrong we're owed 10 000 correct 10 000 plus one thousand is excuse me nine thousand plus one thousands ten thousand yep so they're going to write a check for an additional so plus nine thousand dollars and this is what we call the depreciation when it's been released okay so in other words the insurance company is going to hold this money to them close say we're only going to release the depreciation when you actually do the work and prove it this is incredibly important there's two reasons that the insurance company does this okay here's the first some homeowners are going to get tempted and say my roof's not that bad i could use nine thousand dollars right now i'll let it be and then they pocket the cash so what happens is the insurance company instead of writing this check for nineteen thousand dollars out of the gate they walked away instead of nineteen grand only owing nine thousand and here's the catch this is critically important from new sales season sales guys often don't know this if that homeowner pockets the cash and doesn't do their roof the insurance company not only saved ten thousand dollars but guess what that roof is no longer insured because the insurance company already paid out on it they'd be like saying i lost my wedding ring twice they're like but you lost it once and we paid you for how did you lose it again if you didn't buy a new one right it just doesn't it doesn't make sense it doesn't add up by the way i have seen this happen in the field personally i've worked on projects on a claim where i thought it was in the bag and the adjuster showed me that claim had been paid so the insurance company does it to protect their interests okay they're paying less upfront and it's no longer insured now here's the other thing homeowners remember i just talked about how the the um in the car analogy someone might look to save some money and buy that next car for twenty thousand dollars and then keep the four thousand dollars in their pocket and i told you that doesn't work like this because the only way is to invoice the insurance company so here's the funny part if i do the roof not for 20 000 but for 18 000 and then i invoice the insurance company for hey i did it for 18 000 they are going to release up to that amount minus the deductible so instead of releasing the 9000 they're only going to pay the additional seven because it's the homeowner's responsibility to pay their deductible and the only way to cheat this system which people do is fraudulent there are new laws that are coming into effect on a regular basis i just did an interview with ryan from fund my deductible at the laws changing in texas and all over the country they're looking for this because it is fraudulent and the only way is for that contractor to write an invoice with a amount and that puts you the contractor and the homeowner in a position of insurance fraud saying we did it for this but we're going to pocket the difference because you are providing false information so this is how i explain the process i use the analogy and let's go a quick summary we're going to wrap this up i'm going to give you some tips to use the next time you present this and again remember when you explain to that homeowner that the amount they'll release has to be invoiced to the insurance company and they're going to take that deductible out no matter what and falsifying or playing any games is insurance fraud and believe it or not there are people behind bars right now for doing stuff like that so don't do it so let's just do a quick summary i always explain this process to homeowners by using the analogy of a car okay the top number of what the vehicle is worth is what's considered the replacement cost value and these go up every year so the replacement cost value on a roof is changing because material and labor rates fluctuate and usually they're going up okay so this is the top line what it costs to replace in today's market but then the insurance company is going to look at the actual cash value okay what the car or the roof is worth today in the condition that it's in is it 10 years old is it five years old is it 20 years old so we're gonna write the actual cash value then they're going to take out their deductible that's the contractual agreement between the insurance company and the homeowner of what they've agreed already by setting up the policy in this example it's a thousand bucks so we have the actual cash value minus the deductible equals the first check okay now from that first check the difference is with a car claim they're going to pay the whole thing people can pack at the cash but when it comes to the to the roof claim this first check is just basically enough to get the job started pay a deposit all right remember if the homeowner doesn't do the work the insurance company just saved ten thousand dollars and they don't even have to insure the roof anymore because it was already paid for okay so what you need to do is conduct all the repairs make sure everything is listed on the insurance scope or loss then you do the work you invoice the insurance company and then they release what's called the depreciation which is the difference between the new value and today's value that's the depreciation and they're going to release those funds at the end to the homeowner to then pay you and get you made whole got it all right now if you need to bring a little sketch pad sketch this out for homeowners it will help them make sense of it because all of them are thinking about this right here how do i take this and save money and when you can explain this process now that you understand it you see how to explain it you can explain it whether you're seasoned pro or brand new and you're going to overcome that objection about the deductible and i don't want to pay it how much can you save me and you know exactly what to do from here moving forward all right listen i've got some more videos coming soon on how to start reading these scopes of loss what they all mean how to communicate them to a homeowner but for now this video just because our time here is done doesn't mean you're in mind needs to be so if you're new in roofing sales hop into this playlist right here and i'm going to help you get brought up to speed really quickly new and roofing sales start here and if you're new here jump in and download a free copy of my pitch like a pro roofing sales training video library 120 videos plus organized by category easy reference for you or your team download pitch like a pro and hop into this playlist to learn more about how to become an ace in roofing sales see in the next one