What is the difference between ACV and RCV on a roof claim?

Why is the first cheque so much smaller than the estimate?

Because two separate deductions happened between the estimate and the payment, and only one of them is obvious.

The adjuster writes a scope of loss with a replacement cost total — say $18,000. Then depreciation comes off, based on the roof’s age against the expected service life your carrier uses. A twelve-year-old asphalt roof against a twenty-five-year life is roughly 48% depreciated, so about $8,640 comes off. That leaves $9,360 of actual cash value. Then your deductible comes off. At $2,000, the cheque is $7,360.

Nothing has gone wrong. That is the policy working exactly as written. But if you were expecting $18,000 and received $7,360, it reads as a lowball, and a great many homeowners conclude they are being cheated when in fact they simply have not been shown the arithmetic.

The claim value estimator runs those numbers with your own figures.

What is recoverable depreciation?

It is the $8,640 in that example — the money held back from the first cheque, released once the work is completed and documented.

On a replacement cost policy, depreciation is recoverable. The carrier withholds it, you complete the work, your contractor submits the final invoice and photographs, and the carrier releases the balance. You end up with the full replacement cost, less only your deductible.

On an actual cash value policy, depreciation is not recoverable. The first cheque is the whole payment and there is no second one.

Which kind you have is written in your policy, usually on the declarations page under the dwelling coverage, and it is worth reading before a storm rather than after.

What happens if I take the cheque and do not do the work?

You forfeit the recoverable depreciation.

This is the single most expensive misunderstanding in roof claims. The first cheque feels like a settlement, so people bank it, patch the roof, and never file the completion paperwork. In the example above that is $8,640 left with the carrier — money that was already approved and already yours, conditional only on doing the job.

There is also a downstream cost. An unrepaired roof that was the subject of a paid claim complicates the next claim, because the carrier can reasonably argue you were paid to fix it and did not.

How is depreciation actually calculated?

Carriers use their own schedules and they are not obliged to publish them.

The common approach is straight-line: age divided by expected life, applied to the replacement cost. Some carriers cap depreciation at a percentage regardless of age. Some depreciate the shingle but not the labour, which produces a materially better outcome for you. Some apply different lives to different components — the shingle, the underlayment, the flashing.

The scope of loss should show the depreciation applied per line item. If it shows only a total, ask for the itemized version. You are entitled to understand how the number was reached, and a line-item scope is also what your contractor needs in order to spot anything missing.

Does the roof’s age change what I am owed?

It changes the ACV, not the RCV.

An older roof depreciates more, so the first cheque is smaller and the recoverable portion is larger. The replacement cost itself does not move — replacing a twenty-year-old roof costs the same as replacing a five-year-old one.

Some policies applied to older roofs switch from RCV to ACV entirely at a certain age, often around fifteen or twenty years, sometimes as a “roof surfaces payment schedule” endorsement. That endorsement can turn a full replacement into a fraction of one, and it is added at renewal, frequently without the homeowner registering it. If you have an older roof, look for it specifically.

What if the estimate itself is too low?

That is a different problem from depreciation, and it has its own process: a supplement.

First scopes are frequently incomplete, not because anyone is acting badly but because the adjuster could not see rotted decking, code-required upgrades, or hidden flashing until the old roof came off. A supplement adds that scope to an already-approved claim. It is routine.

Depreciation is arithmetic applied to a scope. If the scope is wrong, fixing the depreciation will not help — fix the scope.

Common mistakes

• Treating the first cheque as the settlement. On an RCV policy it is a deposit. The rest is released on completion, and it is forfeited if you never complete.
• Not knowing which policy type you have. ACV and RCV produce completely different outcomes on the same roof and the same damage. Read the declarations page now.
• Missing a roof-surfaces endorsement at renewal. It can quietly convert an RCV policy to ACV for the roof alone, on the roof, at the age when you are most likely to need it.
• Accepting a scope with no line-item depreciation. Ask for the itemized version. You cannot check arithmetic you cannot see.
• Assuming depreciation is negotiable. It usually is not. The scope often is. Argue about the scope.