Does your Insurance Cover Roof Replacement?

That’s the question everyone wants to know. Here’s what you need to know about Actual Cash Value vs. Replacement Cost Value:  

Homeowners often wonder if their insurance will cover the cost of replacing a damaged roof. The answer depends largely on the type of coverage you have and the specifics of your policy. Let’s dive into the details, including the crucial differences between Actual Cash Value (ACV) and Replacement Cost Value (RCV).

1. Actual Cash Value (ACV):

ACV takes depreciation into account when determining the payout for your roof replacement. It considers the age and condition of your roof at the time it was damaged. So, if your roof is ten years old and damaged by a covered event, the insurance company will pay for the cost of a roof of similar quality, minus depreciation.

Example: If the cost to replace your roof is $10,000 and your roof is deemed to have depreciated 50% in value due to its age, the ACV payout would be $5,000.

2. Replacement Cost Value (RCV):

RCV, on the other hand, covers the full cost to replace your roof with a new one of similar quality and materials, without deducting for depreciation. This coverage typically results in a higher payout compared to ACV because it does not factor in depreciation.

 Example: Using the same scenario as above with RCV coverage, the insurance company would cover the full $10,000 replacement cost of your roof.

Don’t know what kind of coverage you have? Be sure to check your insurance policy to understand whether you have ACV or RCV coverage for your roof. Most standard homeowner’s policies typically offer ACV coverage by default, with an option to upgrade to RCV coverage for an additional premium.

If you’re unsure about your policy’s coverage or need guidance in filing a claim, give us a call at John Peters Roofing and we’ll help you through the whole process.