Replacement Cost vs Actual Cash Value on a Roof Claim

Replacement cost value (RCV) is what it costs to put a new roof of like kind and quality on your home today. Actual cash value (ACV) is that same replacement cost minus depreciation, the amount your insurance company takes off for the age and wear of the old roof. On a replacement cost policy, you usually get the ACV first and the depreciation later, once the roof is replaced. On an actual cash value policy, the ACV is the most the policy pays for the damage, and the depreciation never comes back. Your deductible comes out either way.

This is general information to help you understand your claim. It is not insurance advice. Your own policy, and your insurance company, decide what is covered and how it is paid.

The four numbers on your roof estimate

When an adjuster approves roof damage, the estimate (often called the scope of loss) ends with a short summary. The labels vary by insurance company, but the math is nearly always the same:

• Replacement cost value (RCV). The total of every line item: tear-off, new shingles, underlayment, flashing, vents and the rest, priced at today's cost.
• Depreciation. The amount held back or taken off for the roof's age and condition.
• Actual cash value (ACV). RCV minus depreciation.
• Net claim. ACV minus your deductible. This is usually the first check.

Put together: RCV minus depreciation equals ACV, and ACV minus your deductible equals the first check. On a replacement cost policy, the depreciation is the money still waiting for you. If the summary splits depreciation into "recoverable" and "non-recoverable," only the recoverable part can be paid later.

If your estimate is full of item codes and unit prices, our guide to reading an insurance roof estimate written in Xactimate walks through it line by line.

How replacement cost and actual cash value policies pay

	Replacement cost (RCV) policy	Actual cash value (ACV) policy
First payment	ACV minus your deductible	ACV minus your deductible
Depreciation	Usually held back, then paid after the roof is replaced (recoverable)	Taken off for good (not recoverable)
Most the policy pays for the roof	Up to the cost to replace it, within your limits	The depreciated value
What you usually still pay	Your deductible, plus anything the insurer does not cover and any upgrades you choose	Your deductible plus the depreciation, plus anything not covered and any upgrades

The sample Homeowners 3 form published by the Insurance Information Institute, which many policies follow, says the insurer will pay "no more than the actual cash value of the damage until actual repair or replacement is complete." That sentence is why the money comes in two parts on most replacement cost claims.

How depreciation is figured on a roof

Depreciation reflects how much of the roof's useful life was already used up when the storm hit. Adjusters generally look at the roof's age, its condition before the storm and the expected life of the material. An older or worn roof carries more depreciation than a newer one. In Arkansas, we tell homeowners to expect 15 to 20 years from an asphalt shingle roof, so a roof well into that range will usually show a large depreciation line.

Can labor be depreciated in Arkansas?

Yes, if your policy says so and the insurer follows the state's rules. Arkansas Code 23-88-106, passed as Act 279 of 2017, allows "expense depreciation," which covers the cost of goods, materials, labor and services. In Bulletin 10-2017 (August 1, 2017), the Arkansas Insurance Department explained the conditions: the policy has to give notice, in a form the Insurance Commissioner approves, that expense depreciation may be deducted, and an insurer that applies it has to give you a written explanation of how it was calculated. The bulletin says that explanation should be "reasonable and based on a combination of objective criteria and subjective assessment." If labor depreciation shows up on your estimate and you do not understand how it was figured, you are entitled to ask for that explanation.

Roof schedules on older roofs

Some Arkansas policies now carry a roof payment schedule on roofs 7 years or older, which pays for the roof by a table based on its age instead of full replacement cost. If your policy has one, it changes how much you can expect even on an RCV policy. We explain how to check in my roof is over 7 years old: will insurance still pay to replace it?

How to get your recoverable depreciation paid

On a replacement cost policy, the held-back depreciation is released after the work is done. The usual path looks like this:

1. Read the deadline in your policy. Many policies set a time limit to tell the insurer you intend to claim replacement cost. In the 2000 edition of the standard ISO HO-3 form, that notice is due within 180 days after the date of loss, according to the Independent Insurance Agents and Brokers of America's IA Magazine. Your policy may say something different, so look for the loss settlement section and do not wait.
2. Get the roof replaced. The first check is often not enough to start the job by itself, which is normal. The depreciation is paid for work that is actually done.
3. Send proof of completion. Insurers generally ask for a final invoice or certificate of completion. When we finish a roof, we send your adjuster a signed certificate of completion so the remaining funds can be released.
4. Watch for more than one check. With supplements approved in stages, homeowners often get three or four checks. If your mortgage company is named on a check, send it to them right away the way they require; we recommend overnight delivery with tracking.

What the insurance company is told about the work and what you paid has to match what actually happened. Arkansas Code 23-66-501 to 513 makes it a fraudulent insurance act to give an insurer false information, and we never knowingly do.

What you still pay on a replacement cost claim

An approved replacement cost claim does not mean the roof costs you nothing. Your share is usually:

• Your deductible. It is always your responsibility. Patriot Roofing and Restoration follows Arkansas HB 1308 (2025) and never waives, absorbs or pays a deductible. Patriot financing helps cover deductibles, with approved credit.
• Decking the insurer does not pay for. Rotted or damaged decking found at tear-off is replaced as needed, and the insurer may not cover all of it.
• Upgrades you choose. Insurance pays for like kind and quality. If you want more, such as an impact-rated shingle, the difference is yours and goes into the construction agreement.

On an actual cash value policy, add the depreciation to that list, since it is not paid back. That gap is the main reason to know which kind of policy you have before a storm, not after. For the bigger question of whether a claim will cover a whole new roof, see does insurance cover roof replacement in Arkansas?

How to tell which kind of policy you have

Check your declarations page and the loss settlement section of your policy for "replacement cost" or "actual cash value," and see whether the roof is treated differently from the rest of the house. Look for a roof schedule endorsement, a notice that expense depreciation may be deducted, and your deductible and any separate wind and hail deductible in dollars. If anything is unclear, ask your agent: "If my roof is replaced after hail, is it paid at replacement cost or actual cash value, and how is depreciation figured?"

How we help on a storm claim

We start with a free storm or replacement inspection and photograph every slope. If there is damage, we help you call your insurance company and meet the adjuster. Once the claim is approved, you send us the scope of loss and our specialist checks every line, including the RCV, depreciation and ACV figures, against what your roof actually needs. Anything left off goes to your insurer in a supplement with our detailed estimate; the main supplement usually takes 21 to 30 days. Patriot does not negotiate settlements or act as a public adjuster: your insurance company decides coverage, and we work with them on the facts of the damage. See how roof claim supplements work and our storm damage repair page.

Frequently asked questions

Is RCV or ACV better for a roof?

For the homeowner, replacement cost coverage usually pays more on a claim, because the depreciation can be recovered once the roof is replaced. Actual cash value coverage usually costs less up front but leaves the depreciation with you. Your agent can tell you the price difference for your home.

What is recoverable depreciation?

It is the part of the depreciation a replacement cost policy will pay back after the work is done. Non-recoverable depreciation is not paid back.

Why is my first insurance check so low?

On most replacement cost claims, the first check is the actual cash value minus your deductible. The held-back depreciation, and any approved supplements, usually come later.

Can insurance depreciate labor on a roof claim in Arkansas?

Yes, if the policy gives the approved notice that expense depreciation may be deducted. Under Arkansas Code 23-88-106, the insurer must also give you a written explanation of how the depreciation was calculated.

Will Patriot Roofing pay my deductible or the depreciation?

No. Both are part of your claim under your own policy. We never waive, absorb or pay a deductible, and we never offer credits that offset one. Financing with approved credit can help you pay your share.

Not sure what your estimate means?

Book a free storm or replacement inspection. We will check every slope, photograph what we find and walk you through your RCV, depreciation and ACV figures in plain words. Contact us or call 501.441.2900.

Sources: Insurance Information Institute, sample Homeowners 3 Special Form HO 00 03 10 00 (iii.org), checked November 9, 2026; Arkansas Code 23-88-106 (FindLaw) and Arkansas Insurance Department Bulletin 10-2017 (August 1, 2017), checked November 10, 2026; Bill Wilson, "Does the ISO HO-3 Require Replacing Property Within 180 Days?", IA Magazine, January 22, 2016 (iamagazine.com), checked November 10, 2026. This article is general information, not insurance advice. Coverage, deductibles, depreciation and deadlines vary by policy and insurance company. Confirm the details with your agent or insurer.