The first payment on a Converse hail roof is almost always less than the estimate that came with it. That is not necessarily an underpayment. It is usually depreciation, and understanding it is the difference between recovering the whole claim and leaving a third of it with the carrier.
Two numbers on every estimate
Replacement cost value (RCV) is what it costs to replace the damaged property with new. Actual cash value (ACV) is RCV minus depreciation for age and condition. Most Texas homeowner policies pay ACV first, then release the difference, called recoverable depreciation, when the work is done.
So an $18,000 roof on a 12-year-old house might show $6,500 of depreciation. Minus a $2,000 deductible, the first check is $9,500. The $6,500 is owed to you once you replace the roof and send the invoice.
Where people lose money
- Never claiming the depreciation. Policies give you a window, often 180 days to a year from the ACV payment, to complete the work and request the holdback. Miss it and the $6,500 is gone.
- Taking a cheaper roof. If you replace an $18,000 roof for $12,000, most policies pay the lesser of the two. Recoverable depreciation is capped by what you actually spend.
- Excessive depreciation. A 30-year architectural shingle at year 12 should not be depreciated 60 percent. Depreciation on labor is not allowed under many Texas policy forms. Both are negotiable, and both are checked in every estimate we review.
- ACV-only roof endorsements. Some carriers have added roof schedules that pay ACV only, with no recoverable holdback, on roofs past a certain age. Read your declarations page; if you have one, the negotiation is about the depreciation percentage itself.
What to do
Keep the estimate, the ACV payment letter and every invoice. Do the work. Request the holdback in writing with the final invoice. And before any of that, have the RCV figure reviewed, because depreciation is calculated on it: every missing line item on the estimate also shrinks the holdback you get back.
General information for Texas policyholders, not legal advice. Your claim depends on your policy and your property. More from the blog.