Working with insurance can be confusing and complicated. If you’re curious about your policy or plan, it’s best to give your insurance agent a call and discuss with them the finer details.
When it comes to repairing or replacing your roof, insurance definitely comes in handy, and it’s important to know what kind of coverage you have. One of the terms you probably hear thrown around a lot is “deprecation,” and it’s important to know exactly what it means.
Depreciation and Your Roof
Depreciation is a financial term for loss of value. Even if your property value goes up (or appreciates) over time, your home’s individual components, including the roof, often experience depreciation due to wear and tear, and the passage of time.
Every roof depreciates based on its age and condition. This comes into play when your insurance company determines how much of your roof replacement they will pay for.
How Depreciation is Calculated
When you file an insurance claim to have your roof replaced, a claims adjuster will look at the roof and determine its depreciation. This calculation is mostly based on age. A roof is typically considered to have a lifespan of 20 years, and a depreciation rate of 5% per year is standard.
So if your roof is 5 years old, it will have depreciated 25%. More may be added to the depreciation calculation if the claims adjuster determines your roof is in poorer condition than would be expected, considering its age.
Recoverable vs. Non-Recoverable Depreciation
When you file an insurance claim to pay for roof replacement, the insurance company will write you a check for the Actual Cash Value (ACV) of your roof, minus your deductible. The ACV is the amount it would take to replace your roof, minus its depreciation.
The difference between recoverable and non-recoverable depreciation basically comes down to what kind of policy you have. If you have Replacement Cost Recovery, your insurance company will usually pay you back for the depreciation amount after repairs are made. If not, you will have to pay the portion yourself. Be sure to check your insurance agency to learn more about what your policy covers and doesn’t cover.
Contact us today to learn more about working with LB Solutions, LLC. As one of the most trusted roofing teams in the Twin Cities area, we’re committed to helping you through the roof repair and replacement process every step of the way.