The insurance claim process for roof damage follows clear steps. But these steps are confusing if you’ve never been through the process.
The process that has the most questions revolves around “recoverable depreciation”. While some of the questions are about what it is, most have to do with how it works.
It’s a pretty simple answer, but it requires some understanding before getting there. That’s exactly what this article aims to do.
For over 30 years, the team at Bill Ragan Roofing has helped homeowners understand everything they need to know about filing a roof damage insurance claim. That’s why I’ll be breaking down recoverable depreciation.
This article answers the following questions:
- What is recoverable depreciation?
- Which insurance policy gives you recoverable depreciation?
- How does recoverable depreciation work for a roof damage claim?
- How do you avoid committing insurance fraud with recoverable depreciation?
What is recoverable depreciation?
Roof depreciation is the amount your roof’s value has decreased over the years. When filing a claim, your insurance company determines how much value it lost from years of wear and tear.
(Wind damaged roof with a lot of wear and tear)
Depending on your insurance policy, you can get this lost value back with recoverable depreciation. Recoverable depreciation is the final check your insurance company sends you after proving that all the work has been completed.
You’ll get a first check for the value that your roof is worth today. Then the insurance sends a second check for the depreciated value of your roof once the job is completed.
But just know that getting recoverable depreciation depends on your insurance policy. Which takes us to the next point.
Which insurance policy offers recoverable depreciation?
As I just said, getting recoverable depreciation depends on your insurance policy. So, you need to know if your policy even gives you a right to recoverable depreciation before getting to how it works.
That’s why I’ll quickly review the two types of insurance policies to make sure you’re supposed to get recoverable depreciation in the first place.
ACV policy
An ACV policy stands for Actual Cash Value. With this policy, you’ll get a payout for the depreciated value of your current roof.
This means the insurance company only pays out the roof's current value as it stands today. Once your claim is approved, you’ll get a check for the actual cash value and pay the cost difference for your new roof out of pocket.
RCV policy
An RCV policy stands for Replacement Cost Value. This policy ensures your insurance company pays for your entire roof replacement.
But unlike an ACV policy, you don’t get a check for the full amount upfront. You’ll get the actual cash value of your roof first, and the depreciated part after the job is completed.
How does recoverable depreciation work for a roof damage claim?
As you just learned, you need an RCV policy to get recoverable depreciation. But how does it actually work?
When your roof damage claim is approved, the insurance company gives you an estimate for the scope of work required to restore your current roof to a brand-new version of itself. First, you’ll get a check for the actual cost value of your roof while the insurance company holds back the recoverable depreciation.
After finding a roofing contractor, you’ll get anything missing on the claim supplemented and your roof replaced once everything is completed. Once the job is done, you or your roofing contractor provide proof that the scope of work was done per the claim.
As long as everything checks out, the insurance company sends another check with the recoverable depreciation that covers the rest of the new roof’s cost. But if you don’t get the work done or don’t follow the scope of work exactly, the insurance company doesn’t have to give you the depreciated part of the claim.
This leaves you paying out of pocket and can lead to inadvertently committing insurance fraud.
How to avoid committing insurance fraud when it comes to recoverable depreciation
Your roof must be replaced in accordance with your claim paperwork to get recoverable depreciation. That’s why the insurance company requires proof that the work was done correctly and in line with the estimate.
But failing to do so and then requesting the check for depreciation can lead to insurance fraud. Some homeowners do this inadvertently because the roofing contractor didn’t follow the scope of work correctly.
But if you leave stuff off on purpose and try to keep extra money, you’re committing insurance fraud. This is why a reputable roofing contractor asks to see your insurance paperwork.
They do this to ensure they’re following the claim correctly, so your roof gets everything it requires. An experienced roofer will even help you supplement anything that insurance leaves off.
I won’t work with a homeowner if they don’t show me their insurance paperwork. Most of the time, this is because they don’t know how the process works or they don’t know who to trust.
But if they’re actively trying to hide it, they’re usually up to something I don’t want to be a part of. Just know that your insurance company will not make your life easy if you try to do any of this.
But as long as you hire a reputable roofer with experience working with insurance claims, you shouldn’t run into this issue.
What you need to know about the insurance claim process for roof damage
Now you know how recoverable depreciation works and how to avoid committing insurance fraud. While recoverable depreciation is a big part of roof damage insurance claims, there’s much more to learn.
The best place to start is by knowing what to expect when filing a roof damage claim with your insurance company. That’s why I wrote another article breaking down the 5 things you need to know about the insurance process.
The team at Bill Ragan Roofing has guided thousands of homeowners in Nashville and surrounding Middle Tennessee areas through the insurance process since 1990. We use this experience to help your roof get everything it needs from the insurance company.
Check out 5 Things You Need to Know About the Insurance Process for Roof Damage to learn what you can expect when filing a claim for roof damage.
