ACV (actual cash value) is the replacement cost of the roof minus depreciation for age and wear; RCV (replacement cost value) is the full cost to replace it with like kind and quality. On an RCV policy, the carrier typically issues an ACV check first, then releases the withheld depreciation — the recoverable depreciation — after the work is completed and invoiced. On an ACV-only policy, the depreciation is never paid.
- →RCV = full replacement cost; ACV = replacement cost minus depreciation
- →RCV policies usually pay in two checks: ACV first, depreciation after completion
- →ACV-only policies never release depreciation — the homeowner covers the gap
- →Depreciation is calculated on materials and sometimes labor, depending on policy language
- →Getting the second check released is a documentation job: final invoice, photos, and a scope that matches the estimate
Nearly every dispute a roofing contractor has with an insurance claim comes back to one of two things: what is in the scope, and how the money is being paid out. This guide covers the second one. Read it once and you will be able to explain a loss statement to a homeowner on the tailgate without guessing.
The two numbers on every loss statement
Open any carrier loss summary and you will find a short stack of figures. They almost always run in this order: replacement cost value, less depreciation, equals actual cash value, less deductible, equals net claim payable. Everything else on the page is supporting detail.
| Line | What it means | Who it matters to |
|---|---|---|
| Replacement cost value (RCV) | Full cost to replace with like kind and quality at today's prices | The contractor — this is the job's ceiling before supplements |
| Depreciation | Value subtracted for age, wear, and remaining useful life | The homeowner — this is the money held back |
| Actual cash value (ACV) | RCV minus depreciation | The first check |
| Deductible | The homeowner's share, subtracted from the first payment | The homeowner's out-of-pocket |
| Net claim payable | What the carrier sends now | Cash flow on day one |
| Recoverable depreciation | Depreciation released after completion, on RCV policies | The second check |
How depreciation is calculated
Depreciation is a function of the item's age against its expected useful life, applied to the replacement cost. A 12-year-old architectural shingle on a 30-year useful-life table carries meaningfully more depreciation than a 3-year-old one. Some carriers cap depreciation at a percentage of RCV; others apply a straight-line schedule.
The important nuance for contractors is what gets depreciated. Materials are almost always depreciated. Labor sometimes is, depending on the policy form and the state. Non-recoverable depreciation exists too — a portion the carrier will never release regardless of completion. When the loss statement separates recoverable and non-recoverable depreciation, read that split carefully before you promise a homeowner their out-of-pocket.
ACV policy vs RCV policy
| RCV policy | ACV policy | |
|---|---|---|
| First payment | ACV, less deductible | ACV, less deductible |
| Second payment | Recoverable depreciation after completion | None |
| Homeowner's gap | Deductible only, in most cases | Deductible plus all depreciation |
| Premium | Higher | Lower |
| Common on | Most primary homeowner policies | Older roofs, rental policies, roof-specific endorsements |
A policy can be RCV overall while carrying an ACV roof endorsement, a roof payment schedule, or a cosmetic-damage exclusion. The roof-specific language overrides the general form. Ask for the full policy, not a summary.
Roof payment schedules and matching
Roof payment schedules — sometimes called roof surfacing payment schedules — pay a declining percentage of replacement cost based on roof age. A schedule can reduce the payable amount substantially on an older roof even when the policy is otherwise RCV. If your homeowner has one, set expectations on the first visit rather than at the final invoice.
Matching provisions are a separate question: whether undamaged adjacent materials must be replaced so the finished roof or elevation matches. This varies by state and by policy language. Read the policy and, where it applies, your state's regulation; do not assume the answer carries across state lines.
Getting the second check released
Recoverable depreciation is released when the carrier is satisfied the work was actually completed at or above the estimated scope. The failure mode is almost never fraud — it is paperwork that does not line up. Your closing package should make the match obvious.
- A final invoice whose line items mirror the approved estimate, item for item
- Completion photos: before, during tear-off, decking, underlayment, flashing, and finished elevations
- Material invoices or delivery tickets showing the quantities actually installed
- Documentation of any change in scope, approved in writing before the work was done
- A measurement report backing the quantities you billed, so squares, ridge, valley, and eave lengths are verifiable
- Permit and final inspection records where the jurisdiction requires them
That last point is where most delays start. If your invoice says 34.5 squares and the carrier's estimate says 31, the difference has to be explained by something a desk adjuster can check. A $10 measurement report with per-facet area, pitch, and lengths gives them that reference without a re-inspection.
How supplements interact with ACV and RCV
A supplement raises the replacement cost value. That change flows through the whole stack: higher RCV usually means higher depreciation in absolute dollars, a higher ACV, and a larger recoverable depreciation balance. The homeowner's deductible does not change. This is why a supplement approved late in the job still matters — the additional RCV is still subject to the same two-check structure.
Submit supplements before the final invoice wherever you can. Once the carrier has closed the file and released depreciation against the original scope, reopening it takes longer than getting it right the first time. The RoofGenius supplement workflow reads the carrier estimate, compares it against the measured roof and the applicable code items, and produces the write-up with the line items and justification attached.
Explaining it to a homeowner in ninety seconds
Homeowners panic when the first check is smaller than the estimate. Use this script: "Your policy replaces the roof at today's cost. The carrier holds back a portion for the age of the old roof and sends the rest now. When we finish and invoice, they release the held-back amount. Your only out-of-pocket is your deductible." Then show them the loss statement lines you just read about, in order.
Absorbing, rebating, or waiving a deductible is illegal in many states and is grounds for license action in others. Quote the deductible as the homeowner's responsibility and stop there.
Common mistakes that cost time
- Quoting the RCV total to a homeowner as "what insurance is paying" — they will receive the ACV first and feel misled
- Invoicing a round number that does not tie to the approved line items
- Skipping decking, flashing, and underlayment photos, then being asked to prove the work months later
- Billing quantities from a field tape with no report behind them
- Filing the supplement after the file is closed
- Assuming labor is never depreciated — read the policy
Put the documentation on autopilot
The claims that pay smoothly are the ones where every number has a source. Order the $10 measurement report for defensible quantities, build the scope in the AI estimator, and run the carrier estimate through RoofGenius supplements so the write-up and the justification travel together.