How this is calculated
A replacement-cost policy settles in two payments. The first — actual cash value — is your replacement cost minus depreciation for the age and wear of the roof, minus your deductible. The second, the recoverable depreciation, is released only after the work is finished and invoiced, and only if you claim it inside the window your policy allows.
That is why the first cheque looks nothing like the bid. It is not a denial and it is not the insurer’s final position. It is the first half of a two-part payment, and the second half has an expiry date.
Worked example. An adjuster writes a roof at $18,000 replacement cost. The roof is twelve years into a twenty-year service life, so $9,600 is withheld as depreciation. The deductible is $2,500.
First cheque: $18,000 − $9,600 − $2,500 = $5,900. After the roof is replaced and the invoice goes in, the insurer releases the $9,600 that was held back. Total received: $15,500, against an $18,000 job — the $2,500 gap is the deductible, which is yours to pay.
What this does not account for
- Supplements. Code upgrades, ice-and-water shield, drip edge and steep-charge items your contractor may add after tear-off.
- Ordinance-and-law limits. Most policies cap code-upgrade coverage at a percentage.
- Overhead and profit disputes. Whether O&P is owed depends on trade count and your state’s case law.
- Matching statutes. Some states require undamaged slopes to be replaced for appearance; most do not.
- Policy type. This assumes replacement cost. An actual-cash-value policy never releases a second payment — check your declarations page.
Common questions
Why is my cheque so much smaller than the bid?
Because depreciation and your deductible were both subtracted before it was issued. The depreciation usually comes back; the deductible does not.
What is the difference between recoverable and non-recoverable depreciation?
Recoverable depreciation is paid back once the work is done. Non-recoverable is withheld permanently and is never paid, whether you replace the roof or not. Your worksheet distinguishes them — if it doesn’t, ask your adjuster in writing.
Can my roofer cover my deductible?
No. A contractor offering to absorb, waive or rebate your deductible is inflating the claim. That is insurance fraud, and specifically illegal under the law of at least 28 states and a policy violation everywhere else, and it exposes you, not only them. Pay your deductible.
My contractor’s bid is higher than the adjuster’s estimate. Now what?
Your contractor files a supplement — an itemised list of the difference, sent to the insurer. It is routine on roof claims and it is usually how the gap closes. Plate II above gives you the covering note.
What if I miss the completion deadline?
The recoverable depreciation is forfeited. Some insurers grant extensions on request, particularly where contractors are backlogged after a large storm, but you have to ask before the deadline, in writing.
Do I have to use the insurer’s preferred contractor?
No. You choose your contractor. The insurer decides what it will pay, not who does the work.