Two ways a policy can value your roof
Replacement cost value, or RCV, is what it would cost today to replace the damaged roof with similar materials. Actual cash value, or ACV, is that replacement cost minus depreciation for the roof's age and condition. A fifteen-year-old roof has used up part of its life, so its ACV is lower than its RCV.
On many replacement cost policies, the insurer first pays the ACV, minus your deductible. The difference between ACV and RCV, called recoverable depreciation or holdback, is released after you complete the repair and send proof. If you never do the work, you usually keep only the ACV payment.
Some Colorado policies, especially on older roofs, pay only ACV for the roof no matter what. Others use a schedule that depreciates roofs on a fixed table by age. These differences are written into your declarations page and endorsements, so read them before a storm, not after.
How the pieces of a claim relate
| Line on the estimate | What it represents | When it is usually paid |
|---|---|---|
| Replacement cost (RCV) | Full cost to replace with like kind and quality | Not paid as a single line; it is the starting figure |
| Depreciation | Reduction for age, wear and condition | Recoverable portion paid after work is completed |
| Actual cash value (ACV) | RCV minus depreciation | First payment |
| Deductible | Your share of the loss | Subtracted from the first payment |
| Code upgrade items | Work required by current building rules, if covered | Often after completion; depends on the endorsement |
| Supplements | Items found or added after the first estimate | After review of the supplement request |
The usual path to the final payment
- Inspection
- Adjuster inspects and writes an estimate showing RCV, depreciation and ACV.
- First payment
- ACV minus deductible, sometimes made out jointly to you and your mortgage lender.
- Contract and work
- You hire a contractor, the permit is pulled, and the roof is replaced.
- Proof of completion
- You or the contractor send the final invoice, and sometimes photos or the permit sign-off.
- Holdback release
- Insurer pays the recoverable depreciation, adjusted for any change in final cost.
Questions to ask your adjuster
- Is my roof covered at replacement cost or actual cash value?
- How did you calculate depreciation, and what age did you assign the roof?
- What do you need from me to release the recoverable depreciation?
- Is there a deadline to finish repairs, and can it be extended?
- Does my policy include coverage for code-required items, and how is it paid?
- Will the checks be made out to my mortgage lender as well as to me?
General information for Colorado Springs, not a quote or professional advice. In an emergency, call 911.