When thunderstorms hit North Texas, it's not uncommon for hail to fall on homes and cause damage. Homeowners often ask what happens to their roof after a hailstorm. The answer depends on the type of insurance coverage they have. If your policy is for Actual Cash Value (ACV), your insurance company will pay the actual cash value of your roof at the time of the covered loss.
This means the actual cash value minus the amount of the deductible minus the cost of depreciation depending on the age of your roof. Depreciation is calculated by a claims appraiser, who will inspect the roof to determine its replacement cost, review its current condition, and estimate its remaining useful life. Full coverage roof insurance would be when you have an open risk policy, without any ceiling limitations, plus a claim settlement base, that is, the cost of replacement. If your roof is shabby or is more than a certain age, your insurance policy may not cover it at all.
The insurance company may include a clause in your policy stating that the basis for the settlement of roof claims will be the real cash value and not the replacement cost, as it has paid too many losses on the roofs and is looking for ways to reduce its costs. Some companies automatically assign replacement cost coverage to your roof based on your age, or you may be able to choose between actual cash value and replacement cost. Roof insurance will include coverage for several types of damage, but roof insurance may also be limited to real cash value (ACV) coverage or replacement cost. However, it favors companies because it limits the payments they pay for roofs during these massive storms, since the total replacement of the roof is not guaranteed, but only the amount of depreciated remaining during its useful life.
Replacement cost coverage usually costs more than coverage with real cash value, but it usually means that your deductible could be your only out-of-pocket expense if the roof is damaged. Ultimately, homeowners need to understand the difference between liquidations for replacement cost and liquidations for actual loss of cash value, and how they affect settlement at the time of loss. If you choose ACV coverage, keep in mind that you're likely to pay more out of pocket after a claim, as your insurance company won't cover the depreciation of your roof. For example, many companies will restrict the coverage of roofs that are more than 15 to 20 years old and, in many cases, will only offer coverage with the real cash value of an old roof.
If your roof is more than 15 to 20 years old or is in poor condition, your insurance company may automatically cover it based on the actual cash value, and you may not have the option to choose the replacement cost. Another example may be when an insurance company performs an inspection of the home and observes that the condition of the roof is not very good, or when it asks how old the roof is and the roof is close to its useful life. Despite these changes, losses have continued to accumulate as inclement weather has damaged roofs and premiums have continued to rise.
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