Residential Roof Claims
Insurance Questions

The normal process is for the insurance company to provide an estimate. That estimate is broken down into four main components: the RCV, ACV, deductible and depreciation. The RCV, or replacement cost value, is the total for the estimate (essentially, what your insurance company believes it will cost to cover the claim in it’s entirety). The ACV, or actual cost value, is how much the insurance company believes the claim items cost “as is” (they depreciate as time goes on so they do not retain the same value they did when they were brand new). This depreciation is the amount the insurance company will withhold until the project is complete and you show proof of the construction (so the items can be insured again at 100% their worth). That is also why it is important to make sure you carry an RCV policy rather than an ACV policy because on an ACV policy this depreciation amount IS NOT RECOVERABLE and is basically an out of pocket expense. *** Policy holders beware when agents try to rope you in with cheaper rates, there is almost always a catch and it normally comes at a MUCH GREATER COST to you in the end *** Back to the ACV, it is the RCV minus the depreciation amount. So your first check will equal the ACV minus your out of pocket expense of your deductible (just like at a doctor’s office visit, this is the portion you are responsible for). Then, like mentioned above, once the construction is complete your contractor should send your insurance company proof of replacement (for future insurability), a completion letter and an invoice confirming the work was completed for the amount they allowed and that the initial check and deductible have been paid out (some insurance companies will require proof of cleared checks and transactions). If you would like a more in-depth breakdown of how insurance claims look, please check out our insurance claims examples page here (clickable option here).

Most policies are Replacement Cost Policies (RCV Policy) so the most common answer would be your deductible. If you have an Actual Cash Policy (ACV Policy), that would mean that any depreciation on your roof would be NON-RECOVERABLE. It would be a good idea to verify this information before moving forward with a claim because it can cause your out-of-pocket cost to increase exponentially (especially if your roof is old). The only way it could end up costing you more than your deductible is if you decide you would like an upgrade to your current roof (because the insurance will only cover the replacement of the same grade material as currently installed).

Homeowners should be aware of the new law that took effect September 1st 2019 (https://capitol.texas.gov/tlodocs/86R/billtext/html/HB02102I.htm). This bill enforces the illegal act of waiving deductibles by fines and jail time. If a free roof sounds too good to be true, IT IS! The deductible constitutes the homeowner’s financial responsibility in an insurance claim. Any discount offered by a contractor would result in a savings for the insurance company and not the homeowner. For instance, if the insurance company’s estimate is for $15,000 and it is depreciated by $5,000, that would make the ACV $10,000. If your deductible is $3,000, then the initial check from your insurance company would be $7,000 (the ACV of $10,000 minus your deductible of $3,000). If you found someone to do the construction for $14,500 instead of the $15,000 the insurance estimated, then you or your contractor would have to send a final invoice for that amount to your insurance company in order to get the depreciated funds released. So if you invoice the insurance company for the $14,500, they will only release $4,500 and you have essentially saved your insurance company $500 for finding someone to do it cheaper than they allowed. On the other hand, if your contractor invoices the insurance for the full $15,000 and you only pay $14,500, your contractor has just included you in committing insurance fraud. By falsely invoicing the insurance company that the entire deductible was paid or that their estimate was paid in full, you are now exposed to being found guilty of penalties ranging up to felonies with serious jail time. Regardless, I would be leery of doing business with any contractor willing to commit a crime in order to attain your business. If he or she is willing to do that, who knows what lengths they are willing to go to when it comes to the quality of your roof and being there down the road to warranty it.