Understanding the Insurance Paperwork

WE NEED TO TALK ABOUT THE MOST CONFUSING PART OF THE INSURANCE PROCESS.

And that is the scope of work also known as the insurance paperwork. So your adjuster handed you a packet at the end of his adjustment, and you don’t know what to do with it. That’s what we’re going to talk about today. So two phrases that are very easily confused, actual cash value or shortly referred to as the ACV and replacement cost value or the RCV. Your insurance policy typically pays out to replace what was damaged up front. They’re going to write you a check for the actual value of the property at the time of loss. So let’s say you have a 40-year roof. Your roof is rated to last 40 years. It’s 10 years old since that was the last time a hailstorm came through or that’s when you bought your house and they put a new roof on. They’re going to depreciate that 25% to the time of loss. So now if we’re following ACV and RCV, you’ll see them broken out on your insurance paperwork at the top of the columns, in the scope breakout.

So just to go through this, you’re going to see a line item of things that will be replaced in the scope of work. The unit prices you’ll see units. Then you see the RCV, the depreciation amount, and the ACV, the actual cash value at the time of loss. That’s important to know. If you have an RCV policy, your insurance company will give you $10,000 for the shingles on your roof, but only if you’re actually replacing them. We’ll get into that in a minute. Right here, we have the different line items right here. We have the different RTVs and they add up to the total RCV, this, like I said, this is a 10 year old roof and they’re each 25% depreciated all those line items because they were all put on at the same time. And so we come over here to the ACV. And if we add these up, they add up to 82 50, which is 25% less than the $11,000. Now this is where you have an agreement with your insurance company that says they’ll replace it, but you’re on the hook for your deductible. Okay? So let’s break this down even further. So your gross claim or the is worth $11,000, we have to subtract your deductible. Let’s say it’s a thousand dollars. We’ve got to subtract that $1,000. And we have to subtract that appreciation, which is $2,750.

And so that makes your net ACV $7,250. Don’t panic. We’re still going to get that $11,000 roof put on, but your insurance company is going to end up paying a grand total of $10,000 for this roof because your costs with your agreement with your insurance company is to pay this $1,000 here. So that’s the importance of you paying your deductible. You will find guys that’ll eat your deductible and things of that nature, but that’s where we get into the insurance fraud land. Because your agreement with your insurance company was that you would pay your full deductible. That’s how we’re able to get the full value of your roof back onto your roof. So I hope this simplifies things for you a little bit. I’m sure you’re still going to have questions. Please reach out to one of our sales reps, uh, that you’ve been dealing with and we can get those questions answered for you right away.