Actual Cash Value vs. Replacement Cost on an Older Roof
A 14-year-old asphalt shingle roof sustains wind damage. The policy is a replacement cost (RC) homeowners form with a 20-year-old roof and a $2,000 deductible. The adjuster's contractor estimates $22,000 to replace the damaged slope. The insured demands $22,000 minus deductible now. The adjuster notes the roof's age and condition and that the policy pays actual cash value (ACV) first, with recoverable depreciation available only after repairs are completed and documented. Depreciation on the roof is calculated at $9,000. The insured has not yet made repairs and says he 'might just take the cash.' There is also a question of whether matching undamaged shingles on other slopes is owed.
1. Calculate the likely initial payment and explain the ACV/RC mechanics.
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On an RC policy, the insurer typically pays ACV first, then releases recoverable depreciation once repairs are completed and documented.
Initial payment ≈ $22,000 replacement cost − $9,000 depreciation = $13,000 ACV, then − $2,000 deductible = $11,000 initial payment. The $9,000 recoverable depreciation is withheld pending proof of repair. If the insured takes the cash without repairing, he generally does not receive the withheld depreciation. The adjuster should explain this clearly so the insured understands the path to the full amount.
2. Address the matching/undamaged-slope question and the deductible interaction.
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Matching depends on policy language and applicable standards; many policies owe for reasonable matching of undamaged areas when repair cannot reasonably match, but not always full replacement of every slope. The adjuster should determine whether matching shingles are available and whether the policy/endorsement addresses matching, then document the conclusion. The deductible applies once per occurrence, not per slope, and is subtracted from the ACV payment; it is not separately deducted again from the depreciation release.