Utilizing a prorated or pro rata roofing warranty as part of your standard terms and conditions is an excellent tool to mitigate risk and limit liability in the event of a major roofing occurrence.
Under a pro rata warranty, if there is a roof defect or failure before the end of the warranty term, the manufacturer will repair the affected area of the roof at a cost which is dependent on the age of the roof at the time of the complaint. Most courts in the United States will routinely enforce prorated warranties in the event of litigation.
Prorated warranties are relatively inconsequential in the event of minor roof leaks or deficiencies. Prorated warranties, however, become a much larger issue as the roof reaches the end of the warranty term or the cost to repair exceeds the remaining value of the warranty. For example, assuming a cost of $1 million dollars for original installation of the roof and the contracted warranty value is reduced by 5% each year, the value of the warranty is dramatically decreased over time. Additionally, if the cost of repairs come close to or exceed the warranty’s value, a prorated warranty allows a manufacturer to take the position that payment of the warranty value is its only legal obligation to the building owner.
Pro rata warranties benefit the roofing manufacturer to the detriment of the building owner as they reduce any money owed to the owner based on the age of the roof. All manufacturers should utilize prorated warranties as part of their standard terms and conditions as a way to limit liability for catastrophic events.
This post was written by Josh Baker.