Repairing and restoring your roof from hail or wind damage is nothing short of stressful. Mother nature can rain down (pun intended) forces that can impair, or completely compromise a roof. In most situations, your insurance provider will cover most, if not all, of the costs incurred to restore your home.
Deciphering an insurance claim takes experience, and knowledge that most homeowners find daunting. Common terms such as “ACV”, “RCV”, “Deductible”, and “Depreciation” are often puzzling to people who don’t handle insurance claims routinely. At Advent Roofing & Restoration, we want our customers to have full clarity about their insurance claim, and acquire the necessary knowledge to make confident decisions about their roofing repairs. There are a few things that should help one understand insurance jargon, and we will attempt to explain RCV, ACV, Deductible, and Depreciation below.
1) RCV (REPLACEMENT COST VALUE):
The RCV (Replacement Cost Value) in a roofing insurance claim is the total cost of repairs to be done.
The deductible is the portion of any insurance claim that the homeowner is responsible for. For example, most deductibles in Texas for a property damage claim are 1% of the assessed value (the dollar amount your home is insured up to) of the home. If your home is worth $100,000.00, the homeowner is responsible for $1,000.00 (1%).
* As of September 1, 2019: “Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of Texas law for a seller of goods or services who reasonably expects to be paid wholly or partly from the proceeds of a property insurance claim to knowingly allow the insured person to fail to pay, or assist the insured person’s failure to pay, the applicable insurance deductible.”
3) TWO-CHECK FUNDS RELEASING PROCESS (ACV AND DEPRECIATION):
Most insurance claims related to acts of God (hail and wind) are costly, and require proper planning and execution to properly restore a home to pre-storm condition. In the state of Texas, payments are split into two checks to ensure the homeowner uses the funds for the repairs, and to also protect the homeowner against dishonest contractors. In an insurance claim scenario, roofing contractors are paid the first portion when the work starts, and the remaining (2nd) portion of the funds after the work is completed.
Check #1: The first check issued to the homeowner is called the “ACV” (actual cash value). This typically comprises of 50-80% of the total funds needed to complete repairs.
How the ACV is calculated
a) RCV (total) – Depreciation (2nd check portion of funds) = ACV
b) Deductible is then taken out of the ACV funds. ACV – Deductible = Check #1 from insurance
Check #2: The second check issued to the homeowner is called the “Depreciation”. This is the 2nd check released AFTER the work is completed by a roofing contractor for the scope of repairs.
How Depreciation is Calculated
a) RCV (total) – ACV – deductible = Depreciation (2nd check)
Should there be items overlooked by the insurance adjuster in the claim, your contractor will submit a supplement to the insurance in regard to receiving more funds to complete the work appropriately. For example, let’s say your roof is 2000 square feet, but the adjuster mistakenly only allowed for 1800 square feet. The contractor would then submit the supplement for the remaining 200 square feet of shingles, underlayment, etc.
Once the supplement is approved, the insurance company will issue an additional (3rd) check to the homeowner, or in some cases will add the supplement total to the depreciation (2nd) check.
We hope this helped in explaining RCV, ACV, Deductible and Depreciation when concerning an insurance claim. If you have additional questions, please contact our office at: (469) 458-7663
“Josh and his crew are spectacular. As an insurance agent I’m always looking for trusted companies that I can refer my insureds to in their time of need. I have only received positive feedback from my insureds that have used this company. I have personally used Josh’s services as well on my home and roof. I only have great things to say about Advent Roofing. Hands down the best customer service as well.”
“As a real estate broker, property investor and homeowner, I put my trust in Josh Felts and Advent Roofing. This is a company founded on integrity. 5 gold stars!”
“Fabulous! In 2016, I was grateful to have Josh’s team manage our roof and fence. He cared for our home as if it was his own. They were thorough and intentional. I appreciated being listened to and have enjoyed the work done ever since. These guys stand alone as a top-tier local roofing company in Dallas.”