Actuarial (and Other) Calculations

Apparently, roof shingles are getting better and longer-lasting.

Traditionally, a standard 3-tab or 4-tab asphalt shingle had an expected life of about 20 years.

Now, in addition to the 30-year “Timberline” brand, there are a bevy of new, longer-lasting shingles expected to last several decades.

Along with a longer life expectancy, some of these new shingles now come with something else: a lifetime warranty.

Converting Dog “Corporate” Years to Human Years

On the surface, that seems like a marketing ploy (not to mention a hollow promise): after all, a warranty is only as good as the company standing behind it.

If the manufacturer isn’t around 30 years from now ” and my guess is that most companies in existence today won’t be around in 2049 ” Voila!, no enforceable warranty.

Of course, the other possibility is that the customer won’t be around in 30 years.

But, for argument’s sake, assume that both the company and the customer make it that long.

Doesn’t that lifetime warranty become an expensive promise to keep?

Nope, not at least according to a roofing contractor friend of mine.

According to him, the shingle manufacturers explicitly assume that hail or other bad weather will take out the roof long before its 30-plus year life is reached.

In other words, your insurance company will replace your roof long before the manufacturer has to.

P.S.: Want to confirm that “lifetime guaranties” cost companies very little?

Take a look at their balance sheets, and see if they’ve accrued a liability for them.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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