In our last blog, we explored whether your homeowners insurance policy would cover the cost of repairing your roof. You’ve done the research, you understand your deductible, and you’re confident your repair costs will exceed it. So it’s a slam dunk, right?
Maybe. Maybe not.
Why Knowing Your Coverage Type Matters
Filing an insurance claim that exceeds your deductible doesn’t always guarantee a favorable financial outcome. To protect yourself and your family, you need to understand:
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The specific language of your policy
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How coverage is broken down across different sections
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What kind of reimbursement each section provides
Breaking Down Your Policy: Coverage A vs. Coverage B
Every homeowners insurance policy contains sections that define coverage based on the type of property:
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Coverage A – Dwelling: Covers the structure of your home
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Coverage B – Other Structures: Covers separate structures like fences, sheds, or detached garages
🔍 Important: These two coverages are often insured differently.
How Are They Insured Differently?
Most policies insure Coverage A (your house) with Replacement Cost Value (RCV) or Actual Cash Value (ACV). But Coverage B (fences, sheds, etc.) is usually insured with ACV only.
Replacement Cost Value vs. Actual Cash Value
So, what’s the difference?
Replacement Cost Value (RCV)
This is the amount it would cost today to replace an item, without deducting for depreciation.
Actual Cash Value (ACV)
This is the item’s current value, factoring in age, wear, and tear—think of it like used car value.
Example:
You total a brand-new car right after leaving the dealership. Even with full coverage, you won’t be reimbursed the full sticker price. You’ll receive the current market value, not what you paid. The same logic applies to ACV coverage on your property.
ACV Is Often Just the Start of the Story
While ACV is the initial payment you may receive, many RCV policies also include recoverable depreciation—but only after the work is completed and verified.
Why Withhold Depreciation?
To prevent fraud and ensure the work gets done correctly.
Once the project is completed, the withheld amount—the recoverable depreciation—is released by the insurance company after verifying:
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Photos of completed work
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Paid invoices
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Proof of deductible payment
How ACV and RCV Work Together: An Example
Let’s walk through a real-world scenario:
Project Cost: $10,000
Deductible (Copay): $1,000
Depreciation Withheld (50%): $4,500
Payment Breakdown:
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Deductible Paid by You: $1,000
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Initial ACV Insurance Payment: $4,500
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Recoverable Depreciation: $4,500 (released after project is complete)
✅ Total Insurance Reimbursement: $9,000
✅ Total Project Paid For: $10,000 (with your $1,000 deductible)
But what if you only had ACV coverage?
You would receive only the initial $4,500, and be responsible for the remaining $5,500 on your own.
So, What’s the Big Takeaway?
Even if your policy includes Replacement Cost Value, there can still be important stipulations or policy addendums.
That’s why it’s absolutely essential to:
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Know the details of your insurance coverage
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Work with professionals who can help you navigate it
Still Have Questions?
If you’re unsure about your coverage, or just want to understand more about how your policy works, we’re here to help.
Visit our website to explore helpful resources and topics at:
👉 https://www.TrinityRestoreTX.com
Why Trinity Roofing?
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✅ We love what we do.
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✅ We love who we serve.
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✅ We are honest and hardworking.
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✅ We do what’s right—even when it’s tough.
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✅ We overcome obstacles.
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✅ And most of all, we care for our clients like we’d want someone to care for our grandmothers.
