How you get paid depends on whether your policy covers replacement cost value (RCV) or actual cash value (ACV). Check your policy’s declarations page to see which one you have.
By the numbers
- Tennessee’s insurance regulator example: a $10,000 roof, 5 years old, depreciated $500 per year ($2,500 total), minus a $1,000 deductible, pays $6,500 on actual cash value.
- On a replacement cost policy, the same claim would pay the current cost of a similar roof minus the deductible, for example $10,000 on an $11,000 roof, and the insurer may pay the $6,500 first and the rest once you submit a receipt.
Replacement cost policies: usually two payments
- First check (ACV). After the claim is approved, the insurer pays the estimated cost of the work minus depreciation and minus your deductible. Depreciation reflects the age and condition of the old roof.
- Second check (recoverable depreciation). After the work is completed, your contractor submits the final invoice and the insurer releases the depreciation it held back, up to the amount in its estimate.
Actual cash value policies
ACV policies pay only the depreciated value of the damaged roof, minus your deductible. There is no second payment, so you pay the difference out of pocket. This is more common on older roofs and some newer policies.
Why the contractor you choose matters
To recover depreciation on an RCV policy, the work generally has to be completed according to the insurer’s scope. Choosing a contractor who understands the claim process helps make sure the roof is fixed properly and the paperwork is complete.
Every policy is different, so confirm details with your insurance company. Learn more about storm damage or see the insurance companies we work with.
