What is the difference between replacement cost and actual cash value roof coverage?
Replacement cost value bases a covered roof loss on what it costs to replace the roof today, less your deductible. Actual cash value subtracts depreciation for the roof’s age, so an older roof pays out less. Many carriers move older roofs to actual cash value, so it is worth knowing which applies to yours before a storm.
Two boring terms that decide the check
Replacement cost value generally pays what it costs to replace the damaged roofing today, subject to your deductible and policy terms. Actual cash value takes that same figure and subtracts depreciation. The older the roof, the bigger the deduction.
Picture a roof replacement that costs $20,000. Under replacement cost coverage the calculation starts from $20,000. On an older roof covered at actual cash value, a large share of that can be deducted for age before the deductible comes off.
Roof age is the number to know
Insurance companies pay close attention to roof age and condition. Depending on the carrier and policy, a roof approaching ten, twelve or fifteen years old may move from replacement cost to actual cash value, and that can also affect what you pay for the policy.
Ask your agent how your carrier treats your roof now, not after the next hailstorm.
The deductible sits on top
Wind and hail deductibles in Texas are often a percentage of the home’s insured value rather than a flat amount. A 2% deductible on a home insured for $500,000 is $10,000. Combined with depreciation on an older roof, that can change whether filing makes sense at all.
Related questions
How do I find out whether my roof is RCV or ACV?
It is in your policy declarations and endorsements. Your agent can confirm it.
Does a new roof change my coverage?
It can. Some carriers treat a new roof more favorably, and some offer credits for Class 4 impact-resistant roofs. Ask your agent.
