How much insurance will pay for a new roof depends on several factors, including your policy type, the nature of the damage, and the roof’s age. Here’s a breakdown of the most common scenarios:
A. Actual Cash Value (ACV) vs. Replacement Cost Value (RCV)
Most homeowners’ policies pay out either based on Actual Cash Value (ACV) or Replacement Cost Value (RCV). Understanding these differences is critical to estimating how much you’ll receive:
- ACV Policies: Insurance companies will pay the depreciated value of your roof. The older your roof, the less money you’ll get for replacement. For example, if your roof is 15 years old and has a typical lifespan of 30 years, the insurer may only cover half the replacement cost.
- Example: If the new roof costs $15,000 and your roof is 15 years old, you might only receive $7,500, minus your deductible.
- RCV Policies: These policies cover the full replacement cost of the roof, minus your deductible. The insurer will pay to replace your roof with a new one, regardless of its age, as long as the damage is from a covered peril.
- Example: If the new roof costs $15,000 and your deductible is $2,000, you’ll receive $13,000.
B. Depreciation and Recoverable Depreciation
Even if you have an RCV policy, the insurance company may initially pay only the Actual Cash Value (the depreciated amount). However, once you submit proof that the roof has been replaced, you may be eligible to recover the depreciation amount. This is known as recoverable depreciation.
- Example: The insurer pays $7,500 upfront (ACV), but once you replace the roof and submit the receipt, they pay the remaining $7,500.
C. Deductibles
In all cases, you’ll be responsible for paying the deductible outlined in your policy. Deductibles typically range from $500 to several thousand dollars, depending on the policy terms and your preference at the time you selected coverage.
Some policies also have specific deductibles for wind or hail damage, which might be higher than your standard deductible. Be sure to clarify what your deductible will be before you file a claim.
D. Roof Age and Condition
Many insurance policies have exclusions or limitations based on the age of the roof:
- Newer roofs: Roofs that are under 10 years old typically qualify for full replacement under an RCV policy.
- Older roofs: If your roof is 20 years old or more, many policies only offer ACV payouts or may require higher premiums for full replacement coverage. Some insurers may not cover roofs older than 20-25 years at all.
E. Exclusions
Certain types of damage may not be covered, particularly if they result from:
- Poor maintenance: Routine wear and tear, or damage resulting from neglect (like failure to repair small leaks) is generally not covered.
- Certain materials: Some policies exclude specific materials, like wood shake roofs, from full replacement coverage.
F. Average Payouts
The average cost to replace a roof varies widely based on material, roof size, and geographic location, but a general estimate for a mid-range roof replacement is between $10,000 and $20,000. Depending on your policy, insurance may cover anywhere from 50% to 100% of that cost.
- For ACV policies, you can expect to receive a lower payout, especially if your roof is older.
- For RCV policies, if the damage is from a covered peril, the insurance may cover almost the entire replacement cost, minus your deductible.
Conclusion
Navigating the insurance claims process for a new roof can be a frustrating experience, but understanding your policy, gathering detailed documentation, and being prepared to negotiate can significantly improve your outcome. By taking an informed and proactive approach, you can ensure that your insurance company pays a fair amount for your roof replacement. Whether you receive an Actual Cash Value or Replacement Cost Value payout, knowing the steps to challenge low offers or denied claims will help you get the coverage you’re entitled to. Contact Professional Roofing Contractors today if you have any questions.
