In this issue of the Executive Report, we will look at fresh ways to sell the value of Metal Roofing Warranties to your residential customers. As you may recall, in recent issues, we have looked in depth at Increased Home Value, Beauty, Low Weight, Fire Safety and Wind Resistance.
Warranties can be very confusing for homeowners. We have become a society that assumes that any product we buy will far outlast its warranty. For example, we do not expect our flat screen TV to be hauled out to the cub once its one-year warranty expires. We also fully expect our vehicles to still be in great condition after their three-year warranties expire.
So, why are roofs any different? Why are asphalt shingle manufacturers giving 35, 40, 50-year and even Lifetime Warranties yet no one who knows the roofing industry well expects those products to last nearly that long? And, in particular, how do you convince younger homeowners, who may be buying their first roof ever, that roofing warranties are very different from other warranties?
It all starts with helping the homeowner understand what a warranty is. It is not by any means an assurance of performance, longevity, trustworthiness, or even suitability. It is a legal contract – nothing more, nothing less. A warranty is a contract between the supplier and the customer that states specific things which, if they occur within certain limitations, will result in some sort of compensation. Of course, that is in the simplest form – in reality, it is a little more complicated.
UNDERSTANDING THE ASPHALT SHINGLE INDUSTRY
Think about this for a second. The asphalt shingle industry would collapse under its own weight if their products started lasting significantly longer than they currently do. Does that surprise you? Let us explain.
There are about 100 asphalt shingle manufacturing plants in North America. Because asphalt shingles are very heavy, they are very costly to transport. For example, the cost to transport a truckload of asphalt shingles from the east coast of the USA to the west coast would embed about $60 per square into the shingle price. If asphalt shingles started lasting longer, unless there was some cataclysmic growth in North American housing, the asphalt shingle industry would never be able to support its own infrastructure!
We are going to look a bit at several things that impact the warranties on roofing materials but let us throw out this one thought-provoking seed – a warranty can be a way to ensure recurring business from a customer. For example, if a product warranty is worded such that, in the event of premature product failure, the manufacturer gives the consumer a coupon for a small discount to buy their product again, that creates recurring business for the manufacturer. This is the dream of durable products manufacturers!
So, that said, let’s look at some of the key warranty issues to discuss with your roofing customers:
Homeowners need to understand that they will receive two warranties upon the completion of their roof installation – one from the product manufacturer and one from the installation contractor. Both should be formalized in writing. The manufacturer covers what they have control over – the product, and the contractor covers what they have control over – the workmanship. As a reputable contractor, you can use this fact to point out how critical it is that the homeowners choose not only a high quality manufacturer but also a high quality installer. Being formalized in your workmanship warranty gives you an edge over most of your competitors!
Our general advice on the contractor workmanship warranty is that it last at least five years. For longer term warranties, you can be very explicit with things that would void the warranty. Many residential metal roofing contractors are offering Lifetime Limited Warranties to the initial owner, and some are even issuing warranties that are transferable at least one time.
The product warranty from your manufacturer will have several key areas to pay attention to. They are as follows:
Manufacturer’s Defects. Many product warranties cover only “manufacturers’ defects” and have no coverage for specific things that could happen to the product as it ages. Unfortunately, these warranties have been designed for manufacturers to hide behind because, if the product simply degrades and fails due to “normal weathering conditions,” they are able to escape liability since the product technically did not have a manufacturing “defect.” Instead, help homeowners look for warranties that also cover things like cracking, splitting, fade, granule loss, and etc. – things that could actually happen to the roof as it ages. Trying to prove later, as a homeowner, that their roofing product had a manufacturing defect that led to failure will be difficult and costly.
Proration. It has been the history of roofing warranties to be prorated, meaning that homeowners receive less compensation the older their roof is when failure occurs. This makes sense – the homeowners end up paying for the portion of time that the roof provided good service. Typically, there was a short “non-prorated” period followed by the remainder of the warranty period during which the warranty was reduced by the same percentage each year. However, we have seen many companies begin to offer warranties which prorate on a different schedule. One example is warranties that prorate to something like 50% perhaps at year five and then prorate each year through the duration of the warranty. Also, there may be different proration schedules for future owners than there are for the original owner. One important thing to point out to the homeowner is that manufacturers who fill their warranties with limitations and accelerated proration must not have much confidence in their products.
Transferability. Things can be all over the map in regards to warranty transferability. Some warranties do not transfer ever to future owners, and some might transfer once or twice, while others transfer as many times as the home is sold during the warranty period. Limiting warranty transferability allows manufacturers to capitalize on the fact that the average home sells every seven years. For example, a warranty that only transfers one time allows them to have their liability only last 14 years, but yet advertise a much longer warranty period. Warranties that have limited transferability cast a shadow over the manufacturer’s confidence in their product, something which affects all owners of the home.
Limitations and Exclusions. Part of the “fine print” of any warranty will include limitations and exclusions. There are several things to help your clients look for; among them are:
- Does the warranty cover materials and labor if repair or replacement is necessary, or does it only provide materials? Helping the homeowner understand that their very best recourse under most warranties is to be told someplace where they can go pick up new shingles, and then figure out what to do with them, is quite eye-opening.
- Is there any maximum payout to the warranty? Many product warranties are capped by the original cost of the product which, in most cases, would be 30% or less of the total roof cost.
- Does the warranty include a requirement for installation over a proper or approved substrate? If so, it will be important to know what an approved substrate is. The qualifications for an approved substrate may include ventilation requirements and, of course, very few homes are or can be ventilated to meet building codes.
- Does the warranty offer specific wind coverage but then have exclusions for hurricanes and tornadoes? This is not uncommon but, still, it is good for homeowners to understand this. They also need to understand that warranties will have exclusions for damaged caused by windblown debris.
- Is there a “normal weathering” exclusion and, if so, what things might the manufacturer consider “normal weathering” that the homeowner may consider to be “failure”?
Understanding and being able to explain the warranties of competing products and the product you’re selling is one of your chief tools as a roofing contractor. Homeowners put a lot of faith in warranties, sometimes mistakenly so. You need to establish yourself as the contractor who can help them sort through all of that.
Please contact me anytime if I can help you better understand roof warranties, and become better at explaining them to your customers. I can be reached at 1-800-543-8938 ext. 201 or email@example.com.