When a storm damages your roof, one of the first steps you’ll take is to file a claim with your home insurance company. Once your claim is filed and inspected, the insurance company will settle the claim based on the type of roof coverage you have on your policy.

There are three common ways roof claims are settled: Replacement Cost, Roof Payment Schedule, and Actual Cash Value. Here’s how each one works:

1. Replacement Cost Settlement

Replacement Cost means the insurance company will pay the full cost to repair or replace your roof with a new one of similar quality, without deducting for depreciation. However, this typically happens in two payments:

• First Payment (ACV Check): After the initial inspection and approval of the claim, the insurance company will issue a check for the Actual Cash Value (ACV) of the damaged roof. The ACV is the replacement cost minus depreciation (the reduction in value due to age and wear).
• Second Payment (Recoverable Depreciation): Once the roof repairs or replacement are completed, and you submit proof (usually an invoice from your contractor), the insurance company will release the second check for the recoverable depreciation amount. This brings the total payment up to the full replacement cost, minus your deductible.

This two-step process ensures the repairs are actually completed before the insurance company pays the full settlement.

2. Roof Payment Schedule Settlement

Some newer insurance policies use a Roof Payment Schedule. This method pays based on a pre-set percentage of the replacement cost depending on the age of the roof. The payment schedule can change from insurance company to insurance company.

For example, if your roof is 15 years old, the policy might only cover 40-50% of the replacement cost. The older the roof, the smaller the payout.

It’s important to review your policy carefully, as Roof Payment Schedules can significantly reduce the amount you receive after a claim.

3. Actual Cash Value (ACV) Settlement

With an Actual Cash Value policy, your insurance will pay you the depreciated value of your roof — not the full replacement cost.

This means if your roof is 20 years old, your claim check will only reflect what your roof is worth today, factoring in age, condition, and wear and tear. You are responsible for covering the difference if you want a full replacement.

How Do You Know How the Insurance Company Pays Claims

Most home insurance company will indicate the Roof Claim settlement option on the Declaration Page. This is something that your home insurance agent or representative should disclose to you up from during the home insurance buying process or annual home insurance review process.

The settlement option is also something that can change with the age of your roof. It is very common for home insurance companies to covert a Replacement Cost settlement to an Payment Schedule or ACV at year 10 or 15.

If you have questions about your roof coverage or want a free policy review, contact Ameriguard Insurance today. We’re here to help make sure you’re properly protected when it matters most.