In my 25 plus years in the roofing business I’ve had my fair share of insurance related projects. I get a call from a potential customer…wants me to check for storm damage, I perform the inspection and sure enough, damage of some sort or another. I give my customer the report, they file the claim, the adjuster comes out and buys the roof…the homeowner is elated…then the letter comes in the mail. Your roof has been approved. Enclosed is your scope of loss equalling to $10,235.12….check minus Un-Recoverable Depreciation and Minus your Deductible. This leaves you $2012.83 to do a $10K roof…and an out-of-pocket expense of over $8000!
Un-Recoverable Depreciation?? Whaaaaa?
What many people don’t know (and I say “many” because it happens a lot) is that, when it comes to a homeowner’s policy, there are 2 main avenues to go. RCV or recoverable Cash Value and ACV OR Actual Cash Value. Now there’s a lot of line items exclusions and inclusions…but for the most part, your policy will fall into one of these two.
RCV covers the replacement of your roof at current market values. If a covered peril has caused significant damage to your, this coverage pays to Replace your roof. They’ll pay your claim, minus your deductible and minus your depreciation (how much “life” the roof has lived). Once you’ve replaced your roof or contracted a roofer to replace your roof, you can recoup the depreciated dollar amount. Most homeowners have this coverage. In most cases, the most you’ll come out of pocket is your deductible.
ACV covers the amount of “life” left on your roof. So, let’s say there’s been a hail storm that’s damaged your roof…you have a 30 year shingle on your roof, the roof is 15 years old…which basically means you have 50% of the life left on the shingles. Through the insurance carriers math, you’ll be paid the roof replacement minus your deductible and minus your depreciation…but you will NOT receive your depreciation upon replacement. This type of policy is popular with multi-property owners. It reduces the monthly premiums…and when you have several properties, those savings add up!
Here’s the rub: Many Homeowners don’t know what type of policy they have. The easy thing is to blame the agent, but we all know that, more than likely, the agent offered it as a way of saving money and without even thinking about it, you took it!
So my Tip of the Week, this week is…call up your agent, ask them if you have ACV or RCV and now…knowing what you know…change it to what you want!