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Replacement Cost Value and Actual Cash Value

Not only is roof damage stressful to manage, but you will need to file an insurance claim to get it repaired or replaced. Before going to your insurance company, you will want to know what perils are covered and what limits you have on your homeowners insurance policy. When purchasing an insurance policy and filing claims, you should be aware of the distinction between replacement cost and actual cash value.

What Kind of Coverage Do You Have? 

Replacement Cost Value (RCV) policies will pay the price to repair or replace your damaged property without deducting for depreciation. An Actual Cash Value (ACV) policy will pay the depreciated price to repair or replace your damaged property. Insurance companies typically determine depreciation based on the condition of the property when it was damaged, what a new roof or damaged item would cost, and how long it would endure the elements.  For example, imagine we have two families, the Millers, and the Jones. Each household has the same amount of damage to their roof. Both families have a $1500 deductible. The deductible is what you have to pay out of pocket.

The Millers’ policy is an RCV, which means when the roof is replaced, they will be reimbursed the full cost of the roof repair, subtracting their deductible. The Jones’ policy is an ACV, which translates to them only getting paid for the current value of the roof repairs, subtracting depreciation and the deductible. Which family would you rather be?

Each policy type covers your roof damage, but an RCV policy delivers more financial protection than an ACV policy.

How Does the Type of Insurance Affect My Claim?

Homeowners insurance can cover damages from windstorms and hail, but some policies exclude these types of coverage. This is fairly typical in coastal or high-risk areas. Purchasing a separate wind and hail policy might be in your best interest in these potentially hazardous areas.

Another good bit of advice is to ask your insurance company if your wind and hail policies have separate deductibles. Some policies have unique deductibles that apply to specific parts of your dwelling, like your roof.

Now that you know the differences between insurance policies and why your insurance policy needs additional protections. It’s important to review your homeowners insurance policy before filing a claim. That way you know what to expect when speaking with your insurance company.

Keep in mind, insurance companies deny insurance claims frequently.

Sometimes insurance claims get denied for legitimate reasons, while other times the denial is a mistake or worse. It could be a filing error, a misunderstanding of your policy terms, or a novice claims adjuster that didn’t understand your policy.

If you feel your insurance claim was unjustly denied, file an appeal with your insurer. If this appeal fails and you believe your case has been grossly mishandled, your next step should be to contact the Chad T. Wilson law firm.

Expert Property Insurance Attorneys

We understand living with roof damage and a denied or underpaid property insurance claim can be a difficult, stressful time. Our attorneys will aggressively pursue your insurance company for every dollar you are due. Get your case review for free and call (832) 415-1432 and speak with an expert property insurance attorney today!

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