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Roof Depreciation: How Roof Age Impacts Insurance

February 16, 2023

6 minutes read

All home and business owners should consider having insurance on their roofs to protect against roof depreciation. Even if you have a newer roof, storms can happen, and other damage can occur. Having insurance will make your life easier in such situations 

Several factors will determine your rate when shopping around for an excellent roof insurance rate. Factors like shape, material, and condition all play a role in how high or low your insurance rate will be. 

While those three factors play a huge role, the roof’s age is arguably the most significant factor when determining your insurance rate. Read on for everything you need to know about roof depreciation and how age impacts insurance. 

What Is Roof Depreciation?

Depreciation is when an asset reduces in value over time, especially when there’s general wear and tear. Roofs aren’t meant to last forever, so they’re bound to have wear and tear as they age, even if there are no inclement weather events that cause damage to the roof. 

There are regulations in place that automatically help insurance companies determine the depreciation of a roof. The main factor is the roof’s age, and then they factor in other things like wear and tear, what material the roof is made with, etc. 

The Newer the Roof, the Better the Insurance Rate

Generally, the newer the roof, the better the insurance rate you’ll get. You’ll likely get a better or lower insurance rate because the roof has less wear and tear than an older roof and will probably be in good condition for longer, pending any natural disasters or inclement weather. 

Since your newer roof won’t depreciate as quickly as an older roof, most insurance companies will offer you a better rate. Several things go into a roof depreciating, though, not just age.

Roofs Over 20 Years Old Will See Higher Insurance Rates

roof depreciation getting new roof covered by insurance

Roofs considered very old, like 20 years or more, will tend to see the highest insurance rates. Most insurance companies will require an inspection before determining your rate when roofs are this old because roofs naturally depreciate as they age. 

When insurance companies see an older roof, they recognize that with its wear and tear, they will have to shell out more money to help repair or replace the roof whenever you eventually file a claim. 

Remember that another massive factor in your roof insurance rate is where you live. If you live in an area with a higher cost of living, even if you and someone with the exact same roof age and quality in a higher price of living space and cheaper, the one with the higher cost of living will see a higher insurance rate. 

Age Plus Wear and Tear

Something to think about when you’re filing an insurance claim for your roof is that just because it’s older doesn’t mean wear and tear, and other factors don’t affect the rate of your claim. For example, two roofs could be the exact same age, but if one has more wear and tear than the other, the roof without as much wear and tear will likely see a better insurance rate. 

Age and Obsolescence

Another thing that insurance companies think about when determining an insurance rate for a roof depreciation is obsolescence. Aging roofs will likely need repairs and replacements sooner than newer roofs. 

Insurance rates tend to be higher for those people if your roof is made with materials and technology that are no longer deemed safe, affordable, or in use. An example of potentially obsolete roofing techniques includes all wood shingles that were used decades ago and are now not ideal for roofs, so roofing companies use other materials. 

Frequently Asked Questions 

For those who still have questions about roof depreciation, here are some of the most frequently asked questions from other homeowners and those who own commercial buildings. 

What is the depreciation of a roof on a residential and commercial building?

roof depreciation commercial building

The IRS states that a residential roof will depreciate in value over 27-and-a-half years, while a roof on a commercial building will depreciate over 39 years rather than 27 and a half.

How is roof depreciation calculated?

You’ll take the age of your roof and subtract 40%. So, your roof depreciates in value by roughly 4% yearly for ten years if your roof is ten years old. You’ll take that 40% and subtract it from the total cost of your roof repair or replacement to get the new valve of your roof. 

How long does a 25- to 30-year roof last?

While the timeframe listed should give you an idea of how long the roof should last, weather conditions and natural wear and tear affect the overall lifespan of your roof. A roof that’s supposed to last 25 years will generally last nine to 12 in areas with extreme weather, while a 30-year roof should last 12 to 15 in places with severe weather like hurricanes and tornadoes. 

Are new roofs tax deductible?

Unfortunately, no. Needing a new roof for your residential property and installing one is not something you can write off on your taxes. If it’s a commercial property, you can write it off on your taxes, but it’s a case-by-case situation. 

Should you replace your 20-year-old roof?

Depending on the materials that your roof was made with, you’ll want to replace your roof after 20 years. If your shingles are intact and there’s no structural damage to your 20-year-old roof, you might be able to get away without replacing it, but you’ll want to assess the shingles first as, after 20 years, it’ll likely need replacing.  

Final Thoughts

Like other parts of a house, the roof will age over time. Materials degrade over time and weather and negatively impact the roof’s integrity. When filing an insurance claim, newer houses tend to see more affordable rates, while older roofs will see higher ones. No matter what way you slice it, age impacts a roof, and roof depreciation will occur over time. 

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