When it comes to protecting your home, understanding your homeowners insurance policy is crucial—especially if your roof suffers damage. Two common types of insurance policies are Replacement Cost Value (RCV) and Actual Cash Value (ACV). While both offer protection, they calculate payouts differently, which can significantly impact your expenses when facing storm damage, a roof leak, or other roof repair needs.
What Is a Replacement Cost Value (RCV) Policy?
An RCV policy covers the cost of replacing damaged or lost items with new ones of similar quality. If a storm damages your roof, an RCV policy will pay to install a new roof without factoring in depreciation, as long as the replacement cost falls within your policy limits.
For example, if replacing your roof costs $15,000, an RCV policy will cover the entire amount (minus your deductible). This ensures you can repair or replace your roof with materials of similar quality, providing peace of mind during stressful times.
What Is an Actual Cash Value (ACV) Policy?
An ACV policy reimburses you for the depreciated value of your damaged or lost items, taking age and wear into account. As a result, the payout reflects the reduced value of your roof or other belongings, rather than the cost of replacement.
For instance, if your roof’s replacement cost is $15,000, but depreciation reduces its value to $5,000, the ACV policy will only pay $5,000. The remaining cost to replace the roof falls on you.
Why we recommend an RCV Policy for Homeowners
Here are three reasons why RCV policies are often a smarter choice:
Full Coverage for Repairs: RCV policies let you replace damaged property with new materials of similar quality. This can save you thousands of dollars on roof repair or replacement.
Less Stress During Claims: Knowing your policy covers the full replacement cost can help you worry less when storm damage or a roof leak happens.
Better Long-Term Value: While RCV policies usually cost more upfront, they protect you from major out-of-pocket expenses down the line, often when you least expect it.
Real-Life Example: ACV vs. RCV Comparison
Imagine a storm damages your roof in Omaha, NE. Your roof, originally installed 15 years ago, cost $15,000. Over time, natural wear from aging, previous hailstorms or heavy snows, and exposure to harsh weather like high winds has reduced its value.
With an ACV Policy
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- The insurance company assesses that the previous wear has led to depreciation that reduces the value of your roof to $9,000.
- Your insurance pays $9,000, minus your deductible.
- You are responsible for covering the remaining cost to replace the roof, leaving you with a significant out-of-pocket expense.
With a RCV Policy
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- Depreciation does not affect your payout.
- Your insurance covers the full $15,000 replacement cost, minus your deductible.
- This makes it far easier to afford necessary repairs or a full roof replacement.
Key Tips for Choosing the Right Policy
Know Your Deductible: Both RCV and ACV policies require you to pay a deductible before coverage starts.
Review Policy Limits: Make sure your policy limits are high enough to cover the cost of a full roof replacement or major repairs.
Talk to an Expert: Give your Insurance Agent or Moyer Exteriors a call to understand our local risks, typical roof replacement costs, and whether your policy provides enough coverage.
Protect Your Roof and Your Wallet
At Moyer Exteriors, we’ve guided many homeowners in Omaha, NE and Lincoln, NE through the insurance claim process after storm damage. The right policy can make recovery smoother and less stressful, which is why we recommend RCV policies for better long-term protection for most homeowners.
If your roof has been damaged by a storm or you’re dealing with a leak, contact us. We specialize in roof repair, roof replacement, and storm restoration, providing expert service while helping you navigate your insurance claim. Call Moyer Exteriors today at (402) 873 – 2435 for a free consultation and protect your home before small issues become costly problems.