Actual Cash Value vs Replacement Cost for Roofs
Two policy terms decide most of a roof claim’s payout: how the policy values the loss, and the deductible. Both are on your declarations page.
Actual cash value (ACV)
ACV pays what the damaged roof was worth at the time of loss: the cost to replace it, minus depreciation for age and wear. An older roof gets a smaller payout.
Replacement cost value (RCV)
RCV pays the cost to replace the damaged roof with similar materials, without deducting depreciation. Many insurers pay in two steps: the ACV amount first, then the held back depreciation after the work is done.
Recoverable depreciation
That held back amount is called recoverable depreciation. To collect it, you usually need to complete the repair and send the final invoice within the time limit in your policy.
Deductibles
| Type | How it works |
|---|---|
| Flat deductible | A fixed dollar amount per claim |
| Percentage deductible | A percentage of the home’s insured value, common for wind and hail in some states |
| Separate wind or hail deductible | Applies only to those perils, often higher than the main deductible |
Read your own policy
Look for the loss settlement section, any roof endorsements and the deductible schedule. Ask your agent to explain anything unclear before you need to claim. See what is usually covered.
Common questions
What is recoverable depreciation?
Under a replacement cost policy, insurers often pay actual cash value first and hold back depreciation. You recover that amount after the work is completed and documented.
What is a percentage deductible?
Some policies set the wind or hail deductible as a percentage of the home's insured value rather than a flat dollar amount, which can make it much larger.