Experiencing roof damage can be a trying time, especially when it comes to navigating insurance claims. Understanding the type of policy you have is crucial in such scenarios. Most homeowners find themselves choosing between an Actual Cash Value (ACV) policy and a Replacement Cost Value (RCV) policy. At Exterior Alliance, we understand the complexities of these policies and are here to guide you through them.

Overview of ACV and RCV Policies

What Does an ACV Policy Entail?

An ACV, or Actual Cash Value policy, factors in the depreciation of your roof. Essentially, this means the insurance payout reflects your roof’s current market value, not its original cost or the cost to replace it. Under an ACV policy, the insurance company pays you the depreciated value of your roof at the time of the claim. This often leads to out-of-pocket expenses for homeowners to cover the full cost of roof replacement.

Understanding an RCV Policy

An RCV, or Replacement Cost Value policy, covers the total cost of replacing your roof without deducting for depreciation. This type of policy provides a more comprehensive coverage, as it aims to return your roof to its pre-damage state. The payout process is typically in two phases: an initial payment based on the roof’s current value, followed by a second payment covering the remainder of the replacement cost upon completion of the work.

Comparing ACV and RCV with a Hypothetical Scenario

To better understand the impact of these policies, consider a hypothetical situation. Imagine your roof, originally installed at $12,000, is now 10 years old.

• ACV Scenario: The insurance calculates the 10-year depreciation and agrees to pay $6,000. If the replacement cost is $15,000, you’re left to pay $9,000 from your pocket.
• RCV Scenario: The insurance first pays the same $6,000 but will cover the remaining $9,000 after the replacement is completed, making the entire replacement largely cost-neutral for you.

Which Policy Should You Choose?

While both ACV and RCV policies provide essential protection, an RCV policy typically offers better financial coverage, minimizing out-of-pocket expenses for homeowners.

The Importance of Supplementing Your Insurance Claim

Regardless of your policy choice, ensuring your claim includes all necessary components and upgrades is vital. A supplemented claim ensures that every aspect of your roof’s needs is considered and covered, including adherence to current building codes.

Key Considerations When Filing a Roof Insurance Claim

Understanding your policy is just the beginning. There are numerous factors to consider when filing a claim, and being well-informed can make the process smoother. Exterior Alliance has extensive experience in guiding homeowners through this process, ensuring you’re well-prepared and adequately covered.

For a detailed guide on what to expect during the claim process, we encourage you to read our article, “4 Things to Expect When Filing an Insurance Claim for Roof Damage“.