Understanding Your Insurance Policy: ACV vs RCV and What That Means for You

by Sep 21, 2023

Insurance policies can be quite perplexing, filled with peculiar language and terminology that can leave homeowners feeling bewildered. Oftentimes, individuals may assume they possess one type of insurance policy, only to discover that their assumptions were incorrect. One of the most critical aspects of your insurance policy to comprehend is the distinction between Actual Cash Value (ACV) and Replacement Cash Value (RCV). By the end of this article, we hope you’ll have a clearer understanding of this differentiation and how it specifically impacts homeowners in Westerly.

homeowners insurance, roof damage insurance, ACV, Westerly

What is ACV?

ACV represents the payout for the depreciated value of your roof. In simple terms, your insurance provider will compensate you for the current value of your roof. For example, if your roof sustains damage worth approximately $15,000, and the insurance company calculates its depreciation at $10,000, with a standard deductible of $1,000, you’ll receive a check for $4,000. Consequently, you’ll be responsible for covering the cost difference between a new roof or repairs and the $4,000 insurance payout.

What is RCV?

Replacement Cost Value (RCV) operates differently. RCV covers the expense of either installing a new roof or repairing the existing one, without factoring in depreciation. To illustrate this with the same scenario as before but with a homeowner possessing RCV in their insurance policy: if the damage to their home is $15,000, with no depreciation deducted, and a $1,000 deductible, the insurance payment will be $14,000. This makes the prospect of roof replacement or repair significantly more manageable. Nevertheless, it’s essential to keep in mind that opting for RCV may result in a higher insurance premium.

homeowners insurance, roof damage insurance, RCV, Westerly

Claims: The Process Can Be Lengthy

Regrettably, the entire claims process can be time-consuming. It’s not as simple as making a quick phone call once you’ve identified the damage and expecting a check in the mail by the end of the week. Here’s a typical outline of the steps involved in filing a claim:

  • Contact Your Insurance Agent: The first step is to get in touch with your insurance agent. They will guide you through the initial stages of filing a claim.
  • Notify an Adjuster: An adjuster, appointed by your insurance company, will conduct an inspection of the damage. The adjuster’s role is crucial as they assess the extent of the damage and determine if it falls within the coverage of your policy.
  • Adjuster’s Assessment: After inspecting the roof, the adjuster will evaluate the damage. If they approve the claim, they’ll begin the process of documenting it. The adjuster holds the authority to approve the claim and proceed.
  • Find a Reputable Roofing Contractor: Once the claim is in progress, you’ll need to find a reputable roofing contractor. It’s essential to choose a contractor who is experienced in handling insurance claims and can provide high-quality work.
  • Additional Needs: The roofing contractor will work with you to identify any additional requirements that must be included in the claim. These may include materials, labor costs, and any unforeseen issues that arise during the repair or replacement process.
  • Submitting the Claim: The supplemented claim, complete with the contractor’s assessment and cost estimates, is sent back to the insurance company for approval. During this stage, the insurance company will thoroughly review your policy and the information you’ve provided.
  • Approval and Commencement: If the claim is approved, the repair or replacement work can commence. The insurance company will provide you with the necessary funds to cover the costs, minus your deductible.

Please note that the above steps may vary slightly depending on your insurance company or the roofing contractor you choose to collaborate with. If you are seeking a professional and reliable roofing contractor in Westerly, consider reaching out to Hendersen Roofing. We have extensive experience assisting homeowners with insurance claims and can help alleviate any concerns you may have.

The Importance of Planning Ahead

Understanding the intricacies of ACV and RCV is crucial for homeowners in Westerly. These terms can significantly impact your financial responsibility when it comes to roof repairs or replacements. Therefore, it’s advisable to discuss these options with your insurance agent before a roofing emergency arises.

Don’t wait until a roofing emergency strikes; plan ahead, find a reputable roofing contractor, and ensure you have the coverage that gives you peace of mind for your Westerly home. With proper planning and understanding, you can protect your home and investment effectively.


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