"Actual Cash Value by Another Name: How Insurers Are Quietly Gutting Roof Coverage While Keeping Your Mortgage Company Happy"
- Joe the roofer
- Aug 7
- 4 min read
Updated: Aug 16
Disclaimer:
This blog is intended for educational purposes only and does not constitute legal or insurance advice. This is written from the perspective as a fellow insurance policy holder and a full time contractor and small time property investor who's noticed a shakeup in available policies offered for residential real estate.
If you’re like most homeowners, you probably assume your insurance policy covers the full replacement cost of your roof—especially if your mortgage company required it.
But what if I told you that more and more Texas homeowners are discovering—too late—that their roof is only insured for actual cash value (ACV), not full replacement?
What if I also told you that this change is being sneaked into policies using feel-good phrases like “scheduled depreciation” or “customer portion,” so it still sounds like you have good coverage—even though you don’t?
Yeah. Welcome to the new world of property insurance fine print.
What Is Actual Cash Value (ACV) vs. Replacement Cost Value (RCV)?
RCV (Replacement Cost Value) means the insurance company pays what it costs to fully replace the damaged item with something new—minus your deductible.
ACV (Actual Cash Value) means they subtract depreciation first. In other words:
“Here’s what your 15-year-old roof is worth today. Good luck covering the rest.”
It’s the difference between getting a check to replace your roof… and getting just enough to pay for a couple bundles of shingles and some Gatorade for the crew.
How Insurers Are Getting Around This Without Violating Mortgage Requirements
Most mortgage companies require you to carry full replacement cost coverage. It’s a standard part of your loan agreement. If you don’t, you could technically be in default.
So how are insurance companies getting away with only paying ACV on roofs?
Simple:They keep the policy labeled as “Replacement Cost,” but then carve out a backdoor exception just for the roof. They’ll call it:
“Scheduled Depreciation”
“Roof Surface Endorsement”
“Non-Recoverable Depreciation on Select Building Materials”
Or my personal favorite: “Customer Responsibility Portion” (translation: we’re keeping that part of the money)
So the policy remains technically compliant with mortgage rules, but functionally gutted where it matters most—your roof.
Why the Roof Is the First Thing to Go
Your roof is:
The most likely part of your home to get storm damage
The most expensive line item on most claims
The least visible to the average homeowner, and
The first place insurance companies can cut payout liability without raising red flags
By reclassifying just the roof as ACV—while leaving the rest of the home “replacement cost”—insurers can save tens of thousands of dollars per claim without technically violating the terms of your mortgage-backed policy.
It’s not just clever. It’s profitable.
Here’s What This Looks Like in Real Life:
You file a hail damage claim. The adjuster agrees your roof is totaled. But instead of writing a check for $24,000 to replace it, the carrier:
Applies your $7,500 deductible
Deducts $9,200 in depreciation (because your roof is 10 years old)
Sends you a check for $7,300
You’re left $16,700 short, and the worst part? There's no recoverable depreciation coming later. That money’s gone—because it was never part of the deal.
But Wait—I Thought I Had Replacement Cost Coverage?
You probably do… just not on your roof.You’re holding what looks like a full-coverage policy—right down to the declarations page. But buried in the endorsements or policy addenda is a tiny clause that changes the rules only for your roof.
And if your agent didn’t explain that to you when you signed up—or if you bought it online and clicked through it like a Netflix terms of service—you’ll never know until you file a claim.
So What Can You Do About It?
Note: this is not insurance advice—just common sense and a few questions worth asking.
Ask your agent:
“Is my roof covered under actual cash value or replacement cost?” Request a copy of your full policy, not just the declarations page. Look for keywords like: “Scheduled Depreciation,” “Roof Surface Coverage Endorsement,” or “Non-Recoverable Depreciation.”
And above all…
Don’t Wait Until After the Storm Hits
By the time you file a claim, the fine print has already been signed—and your deductible + non-recoverable depreciation may leave you with a $15K roof bill and no payout.
That’s why we offer:
✅ Free AI-powered drone inspections
✅ Storm damage reports you can use in policy reviews
✅ Honest insight—without the hard sell
Final Thought:
If it walks like an ACV policy and pays like an ACV policy… it's an ACV policy. Even if the cover page says "replacement cost."
Insurance companies have figured out how to play both sides—keeping the mortgage lender happy while slashing payouts to the homeowner. And unless you're reading every line of your policy, you're playing with a stacked deck.
So let’s make sure you don’t find out the hard way. Because when it comes to protecting your home, clarity is worth more than coverage.
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