Roof Claim Terminology

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ROOF INSURANCE CLAIMS TERMINOLOGY

Deductible

A deductible is a specified amount of money that the insured must pay before an insurance company will pay a claim. For example, if your deductible is $500 and the value of your claim damage is $7000, the insurance company will pay $6500.

Base Service Charges

These are charges associated with compensating your contractor for setup and travel expenses.

Replacement Cost Value (RCV)

RCV is the maximum amount your insurance company will pay for damage to covered property before accounting for reimbursable depreciation. This assumes the use of qualified, licensed, and insured contractors and the current cost to replace your property with new, identical, or comparable property.

Depreciation

Depreciation refers to the loss in value of your roof due to wear, age, or deterioration. For instance, if your roof is warrantied for 40 years and has been in place for 10 years, the depreciation would be 25%.

Actual Cash Value (ACV)

ACV is generally defined as the cost to replace new property of like kind and quality, minus any realized depreciation.

ACV Settlement

The ACV settlement is calculated as the replacement cost value minus the depreciation and the deductible.

Recoverable Depreciation

This is the portion of the depreciated amount that you can get back or “recover” from your insurance company when you make a claim on a policy with replacement cost coverage. These claims are typically paid by the insurer in two parts.

Understanding Actual Cash Value vs. Replacement Cost Value

In response to recent severe storms, including last year’s significant hail storms in Texas, some insurance companies have started offering Actual Cash Value (ACV) instead of Replacement Cost Value (RCV) in their new policies.

Actual Cash Value (ACV)

ACV means your insurance company pays for what your roof is worth at the time you file your claim. This type of coverage takes into account your roof’s age and condition, and the reimbursement amount reflects the depreciation your roof has experienced since it was installed. Essentially, ACV roof insurance considers how much your roof has depreciated over time.

Replacement Cost Value (RCV)

In contrast, RCV coverage does not consider depreciation. Instead, it pays the entire cost to replace your roof after a covered event. While this type of coverage is more expensive than ACV, it ensures you only need to pay your deductible if your roof needs replacing.

If you have an older roof and your policy is an ACV policy, you may not receive enough compensation to cover the full cost of a roof replacement. Opting for RCV coverage can provide greater financial protection and peace of mind, ensuring you are fully covered for the replacement costs without additional out-of-pocket expenses beyond your deductible.

Don’t go it alone! Korrect is here to walk beside you throughout the entire claim process. (817) 888-8827

 

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