When you receive your insurance letter that details the amount of your claim, it can be overwhelming. To gain a better understanding of what you are receiving—and how the total was broken down—it is essential to know about the four main elements involved: actual cash value (ACV), depreciation, deductible and replacement cost value (RCV). By being aware of these components, you will have clarity on all aspects regarding your insurance coverage.
The ACV or Actual Cash Value is a figure that represents the total expected cost of the job. It takes into account market value and factors like labor, materials, taxes, and other associated costs.
The Replacement Cost Value (RCV) is calculated by subtracting the depreciated value from the determined Actual Cash Value amount. Your deductible will be subtracted from this amount, an a initial check will be sent to you directly from your insurance provider in order to start the job.
The deductible is a set amount you must pay out of pocket to your contractor before the insurance company will provide any funds. This is determined by your policy and is typically based on a percentage or fixed dollar amount of the total claim. Unless you have a RCV only policy or you decided to to add upgrades to your roof this will be your only out of pocket expense.
Depreciation refers to how much of the roof’s value is lost due to age and wear and tear. The insurance company typically calculates this amount by taking a look at how long the roof has been installed, the materials it is made of, current condition, and other factors. If your insurance policy only covers the Replacement Cost Value, then this amount will become an out-of-pocket expense along with the deductible. However If your insurance policy includes the depreciated value then once your roof is completed your roofing contractor will send the necessary documentation to your insurance company and then they will release this amount to you as final payment for your roofing job.
By taking the time to understand these four components of insurance coverage, you can be confident when assessing what portion of the job cost you are responsible for and how much reimbursement to expect from your insurance provider. Roof Medics understands this process and will be more than happy to walk you through it! Our team is here to answer any questions or concerns you may have about your roofing project and the insurance process. Contact us today (912)231-7338 for more information.
To get a glimpse of what your insurance breakdown might look like, click the button below to download an example!