The two settlement bases
Replacement cost value (RCV) pays what it costs to replace the roof today. The insurer still withholds depreciation at first — you get the actual cash value now and the withheld balance after the work is done — but the total available to you is the full replacement cost, less your deductible.
Actual cash value (ACV) pays what the roof was worth on the day it was damaged: the replacement cost minus depreciation for its age and condition, less the deductible. There is no second payment. The depreciation is not held back, it is gone.
On a new roof the two are close. On a fifteen-year-old roof the gap is most of the money, and it is the reason two neighbours with identical damage and identical premiums can have wildly different outcomes.
Where to look
Your declarations page is the two- or three-page summary at the front of the policy — the one with your name, the address, the policy number, the coverage limits and the deductibles. It is the page your insurer will send you within a day if you ask for it, and it is where the answer usually sits.
Read these, in order:
- Coverage A — Dwelling. Look for “Replacement Cost” or “Actual Cash Value” next to the limit. This is the headline setting for the structure.
- The endorsements or forms list. Usually a column of form numbers and short titles. This is where the exceptions live, and it is the part almost nobody reads.
- The deductibles block. There is often more than one, and the wind or hail deductible is frequently not the same as the all-other-perils deductible.
If the declarations page is ambiguous, the policy form itself governs, and you are entitled to a complete copy. Ask for it in writing.
The endorsements that change the answer
A policy can be replacement cost overall and still pay actual cash value on the roof. That is done by endorsement, and these are the ones to search for by name.
- Roof surfacing payment schedule (names vary). A table that reduces the payable percentage of replacement cost as the roof ages — sometimes gently, sometimes steeply. A roof past a certain age can be scheduled down to a fraction of replacement cost while the rest of the house remains on full replacement cost.
- Actual cash value roof endorsement. Converts roof surfacing to ACV outright, often triggered by roof age at the time of loss.
- Cosmetic damage exclusion. Excludes damage that marks the surface without affecting function. Most often applied to metal roofs, where hail leaves dents that do not leak.
- Percentage wind and hail deductible. Expressed as a percentage of the dwelling limit rather than a flat amount. On a $400,000 dwelling limit, a 2% wind and hail deductible is $8,000 — which changes the arithmetic of a claim completely, and takes some claims below the point of being worth filing.
- Ordinance and law coverage. Not an ACV question, but on the same page and worth knowing: it is usually a percentage sub-limit, and it is what pays for code upgrades during a re-roof.
None of these are hidden. They are printed, and they are listed by form number on the declarations page. They just are not explained.
A worked example
A fourteen-year-old roof with a replacement cost of $18,000 and a deductible of $2,500. The adjuster depreciates it by $11,000.
On an RCV policy: first cheque $18,000 − $11,000 − $2,500 = $4,500. After the roof is replaced and invoiced, the $11,000 recoverable depreciation is released. Total received $15,500 against an $18,000 job, and the $2,500 gap is the deductible.
On an ACV policy: $18,000 − $11,000 − $2,500 = $4,500, and that is the entire settlement. You are $13,500 short of a new roof, and no invoice will change it.
The first cheque is identical in both cases. That is exactly why so many homeowners cannot tell which policy they have until the second payment does not arrive.
The roof claim calculator asks whether your depreciation is recoverable for this reason — it is the single input that changes the answer most.
Reading it as a claim rather than a policy
If you are already in a claim, the practical question is narrower: is the withheld depreciation on this claim recoverable or not? Ask the adjuster in writing, in those words. Their worksheet normally labels it, and the summary page is where the label appears.
Non-recoverable depreciation is not necessarily an error. It is the correct outcome under an ACV settlement, and it also appears on RCV policies for scheduled items or components past their expected service life. What matters is knowing which you are looking at before you commit to a contract you cannot fund.
What to do before the next storm
- Find the declarations page and read the three things above. Fifteen minutes, once a year, at renewal.
- Establish your roof’s age and keep the proof. A dated invoice from the last replacement is the cheapest insurance document you will ever own — it is what corrects an overstated depreciation figure.
- Check whether your wind and hail deductible is a percentage. If it is, work out the actual dollar amount now rather than during a claim.
- Ask your agent what it costs to move roof surfacing back to replacement cost, if it has been scheduled or converted. Sometimes it is available and sometimes it is not, but the question is free and the answer is priced.
- Photograph the roof while it is undamaged. Condition disputes are much shorter when there is a dated picture of a roof in good order.
Insurers have been narrowing roof coverage in hail-exposed regions for years, and the change usually arrives as a form number on a renewal declarations page rather than as a letter. The renewal is the moment to catch it, because after a loss the terms are fixed.
General guidance on settlement basis in standard residential property policies sold in the United States. Endorsement names, roof schedules and deductible structures vary by insurer and by state, and your own policy wording governs your claim. Not legal, claims or public adjusting advice.