Not all insurance policies are created equal. Some policies don’t cover the amount you need after a natural disaster. It’s important to the type of insurance coverage you have, so you can know how much out of pocket costs to expect.
Insurance companies pay different amounts to fix or replace property damage depending on the type of storm coverage you purchased with your policy. The amount you get for your claim, after the deductible is paid, depends on whether your policy includes ACV or RCV coverage.
Actual Cash Value (ACV) vs Replace Cost Value (RCV) Coverage
ACV is calculated by the amount required to replace or repair your roof, minus any loss in value associated with the age of your roof.
RCV is calculated by the amount required to replace or fix your roof, without subtracting value for the age of your roof.
As you can imagine, ACV results in more out of pocket expense for the property owner, which can catch people off guard. This is why it’s important to familiarize yourself with the coverage provided in your policy ahead of time.