Two homes on the same Plano street can lose their roofs in the same hail storm and receive very different insurance payments. One reason can be a single phrase in the policy: replacement cost or actual cash value. Understanding ACV vs RCV roof coverage tells you where the depreciation goes.
This guide uses the Texas Department of Insurance’s own definitions and worked examples. It explains how each type of coverage pays a roof claim, why roof age matters so much, and what to check at renewal. It is general information, not insurance advice. Your policy and your insurer decide what you are paid.
What is the difference between ACV and RCV roof coverage?
Replacement cost value (RCV) coverage pays to repair or replace your roof at current prices. Actual cash value (ACV) coverage pays the replacement cost minus depreciation, which is a decrease in value because of wear and age. Both subtract your deductible. ACV policies cost less, but they also pay less when you have a claim.
The Texas Department of Insurance (TDI) sets out the difference on its page Home policies: Replacement cost or actual cash value?. TDI says most home policies pay to repair or rebuild your home based on current costs, which is replacement cost coverage. Some policies pay less based on the age and condition of your home, which is actual cash value coverage.
TDI’s homeowners insurance guide defines depreciation as “a decrease in value because of wear and age.” It also tells readers that to be fully protected, they should make sure their policy has replacement cost coverage.
| Feature | Replacement cost (RCV) | Actual cash value (ACV) |
|---|---|---|
| What it pays for, per TDI | Repair or replacement at current prices | Replacement cost minus depreciation |
| Effect of roof age | The same payment however old the roof is | Payment falls as the roof ages |
| Premium, per TDI | Higher | Lower |
| Deductible | Subtracted | Subtracted |
ACV vs RCV roof payments: what does TDI’s example show?
TDI’s example uses a house insured for $200,000 with a 2 percent deductible and a $10,000 roof replacement. A replacement cost policy pays the same for any roof age. An actual cash value policy pays less as the roof gets older, and on a 20-year-old roof it pays nothing at all once the deductible is taken off.
The numbers below come straight from TDI’s replacement cost or actual cash value page. In TDI’s example, the 2 percent deductible is $4,000, and the storm that damaged the whole roof is one the insurance covers. TDI notes that the value of your own house and your deductible may be different.
In TDI’s replacement cost example, it costs $10,000 to replace the roof, the $4,000 deductible is subtracted, and the policy pays $6,000. The roof’s age does not change that result.
The actual cash value side is where depreciation appears. TDI’s figures for the same $10,000 roof:
| Roof age in TDI’s example | Actual cash value of roof | Minus deductible | Policy would pay |
|---|---|---|---|
| 5 years | $8,500 | $4,000 | $4,500 |
| 10 years | $7,000 | $4,000 | $3,000 |
| 20 years | $4,000 | $4,000 | $0 |
Read the last row carefully. In TDI’s example, a 20-year-old roof has an actual cash value of $4,000, exactly the deductible, so the policy pays $0. The homeowner has a covered loss and still receives no payment for the roof.
Where does the depreciation go?
On an actual cash value policy, depreciation is simply not paid. It stays with the homeowner as part of the cost of the new roof. On a replacement cost policy, TDI says most companies hold depreciation back at first and pay it after the work is done. The deductible is never paid by the insurer under either type.
TDI’s homeowners guide gives a second example that shows exactly where the money lands. In TDI’s example, a new roof costs $10,000 at current prices and the homeowner has a $2,000 deductible. In TDI’s example, a replacement cost policy pays $8,000.
On the same 10-year-old roof, TDI says the actual cash value might be $7,000. In TDI’s example, after the $2,000 deductible the actual cash value policy pays $5,000, and you would pay the rest of the new roof yourself.
TDI then totals it up: in TDI’s example, your out-of-pocket cost is $5,000 with actual cash value coverage, against $2,000 with replacement cost coverage. The gap between those two figures is the depreciation. Under ACV, it moves from the insurer’s side of the ledger to yours.
How does a replacement cost policy pay a roof claim?
Most companies pay a replacement cost roof claim with two checks, according to TDI. The first comes after the adjuster inspects the damage and covers the estimated repair cost minus depreciation and your deductible. The insurer pays the depreciation it held back after it receives the bill for the finished job.
TDI describes the process in its homeowners guide and on its insurance and your roof page. The sequence looks like this:
- You report the damage and the insurer sends an adjuster.
- The adjuster estimates the cost to repair or replace the roof.
- The first check arrives: the estimate, minus depreciation, minus your deductible.
- You complete the repairs.
- You send the insurer the bill for the finished job.
- The insurer sends a second check for the amount it kept for depreciation.
Two details matter here. TDI says you usually must complete repairs within a certain period of time, and advises asking your agent or adjuster how long you have. If you miss that window, check with your insurer what happens to the held-back amount.
TDI also says that if you owe money on your home, the repair check is made out to both you and your mortgage company. In most cases, according to TDI, the mortgage company deposits the check and releases money as the work is done. It may ask for a list of the work, cost estimates, details of who is doing it and a timeline.
Why does roof age matter so much for ACV coverage?
Depreciation grows with age, so the older the roof, the smaller an actual cash value payment. TDI’s example shows the payment falling from a 5-year-old roof to a 10-year-old roof, and reaching zero at 20 years. Roof age also affects whether an insurer keeps replacement cost coverage on the roof at all.
TDI’s insurance and your roof page makes three points about age and condition:
- As roofs age, some companies switch roof coverage to actual cash value.
- If your roof is in poor condition, your company might not cover the roof at all.
- Your company should tell you when it changes your coverage.
The same TDI page says your insurer inspects your roof when you apply for insurance, and may charge more or refuse to insure you based on what it sees. TDI’s homeowners guide adds that companies cannot turn you down just because of your home’s age or value, but they can charge more.
North Texas roofs also see a lot of hail. NOAA’s Storm Events Database records 310 hail reports on 62 separate days in the Plano area between 2016 and 2025, with hail of 2 inches or larger on 17 of those days. Research by the Insurance Institute for Business and Home Safety on short-term roof aging found that natural weathering can measurably reduce a shingle’s hail impact performance. A roof’s age and its storm history are both worth knowing before you read your policy.
Will insurance replace an old roof that is simply worn out?
No. TDI states that your insurance company won’t pay for a new roof just because it is old or worn out. Home insurance pays for damage from a covered event, such as a storm or a falling tree. Wear and tear is listed by TDI among the things most policies do not cover, whatever type of roof coverage you have.
TDI’s insurance and your roof page says you can file a claim if a storm, tree or something else damaged your roof. The homeowners guide lists wear and tear among the damages most policies do not cover, and lists windstorm and hail among those most do cover outside the Gulf Coast.
This is where ACV and age interact in a way that surprises people. An older roof may have both storm damage and ordinary wear. On an actual cash value policy, the payment reflects the roof’s depreciated value, not the price of a new roof. If you are unsure what your adjuster counted as storm damage and what as wear, ask for the estimate in writing.
How can you tell which coverage your roof has?
Check the declarations page and any roof endorsements in your policy, then ask your agent directly. TDI says the declarations page summarises your coverages, limits and deductibles. Because some insurers switch roofs to actual cash value as they age, read the renewal documents every year rather than assuming last year’s coverage still applies.
A short checklist for the next renewal:
- Find the declarations page and look for how the dwelling and the roof are valued.
- Look for any endorsement that changes how the roof is paid. TDI’s guide describes endorsements as policy add-ons that increase or add coverage, so read every one attached to your policy.
- Compare this year’s documents with last year’s for any change to roof coverage.
- Ask your agent in writing: “Is my roof covered at replacement cost or actual cash value?”
- Ask how long you would have to complete repairs to collect any held-back depreciation.
- Convert your deductible to dollars, because it is subtracted under both types.
TDI’s claim history page says companies are not supposed to report questions you ask about your policy. TDI advises being clear with your agent about whether you are filing a claim or only asking a question.
Deductibles change the arithmetic as much as depreciation does. Our guide to wind and hail deductibles in Texas shows how a 1 or 2 percent deductible becomes a dollar figure. For the wider picture on hail season and insurance, see our guide to protecting a Plano home from hail.
What if you disagree with the depreciation on your claim?
Start by asking the adjuster to explain how depreciation was calculated, in writing. TDI says that if the damage turns out to be worse than first thought, you or your contractor can talk to the adjuster about raising the estimate. If talking does not resolve it, TDI describes appraisal, a complaint to TDI, or court as the further options.
TDI’s homeowners guide says appraisal is for disputes about the amount of a claim, not whether the policy covers a loss. Each side hires an appraiser, the two choose an umpire, and the umpire’s decision is binding. You pay your appraiser and half of the umpire’s expenses.
TDI also suggests trying to be there when the adjuster inspects, and says it is a good idea to have your contractor with you. A written roof assessment can help that conversation. Roofing Repair Plano explains how it supports homeowners through this stage on its roof insurance claim help page, though the insurer and your policy decide what is paid. If your claim was turned down altogether, our guide to what to do when a roof claim is denied in Texas covers the steps TDI describes.
Frequently asked questions
What does ACV mean on a roof insurance policy?
ACV means actual cash value. TDI defines it as replacement cost minus depreciation, which is a decrease in value because of wear and age. On an ACV roof, the insurer pays the roof’s depreciated value minus your deductible, so an older roof receives a smaller payment. You pay the rest of the cost of a new roof yourself.
Is RCV or ACV better for a roof?
TDI says that to be fully protected, you should make sure your policy has replacement cost coverage. ACV policies cost less but pay less when you have a claim. Which one suits you depends on your budget and your roof, so compare both the premium and what each would pay with your agent.
How much does depreciation reduce a roof claim?
It depends on the roof’s age and condition and on how your insurer calculates it. In TDI’s example of a $10,000 roof, the actual cash value is $8,500 at 5 years, $7,000 at 10 years and $4,000 at 20 years. Ask your adjuster to show the depreciation calculation in writing.
Do you get recoverable depreciation back on a roof claim?
On a replacement cost policy, TDI says most companies pay with two checks. The first is the estimate minus depreciation and the deductible. The insurer pays the amount it kept for depreciation after it receives the bill for the finished job. You usually must finish repairs within a set period, so ask how long you have.
Can my insurer switch my roof to ACV?
TDI says that as roofs age, some companies switch roof coverage to actual cash value, and a roof in poor condition might not be covered at all. TDI also says your company should tell you when it changes your coverage. Check your renewal documents every year and ask your agent to confirm in writing.
