Colorado's brutal hail storms can cause serious damage to your roof including cracks, damaged or missing shingles, granule loss, shingle bruising, or roof leaks.
After a storm, your first instinct may be to call your insurance company to file a claim, either because you see your neighbors doing the same thing or because a roofing contractor told you that's what you need to do.
But before you pick up the phone, it's important that you know whether you have replacement cost value or actual cash value coverage on your policy.
Depending on which one you have, you may end up either only having to pay your deductible, or you may end up with a significant share in the cost of replacing your roof.
What is Replacement Cost Value Coverage?
Most people have replacement cost value coverage on their homeowner's insurance policy. Essentially, this means that your insurance company will pay the full replacement cost to repair the damages to your roof, minus your deductible and you’ll be compensated for the actual cost of replacing your roof without taking the wear and tear or age of your roof into consideration.
Replacement cost value coverage usually has higher premiums but you won't have to pay any more than your deductible to replace or repair your roof like new.
So, if you had a roof with 30-year shingles, your insurance company will pay to put the same type of shingle back on your home, and all you'll have to pay is the cost of your deductible.
What is Actual Cash Value?
When you have actual cash value on your policy, your insurance company will only pay what the property was worth at the time of the loss.
For example, if your roof is ten years old, there's going to be ten years of depreciation on it. If you have an actual cash value policy, then you're not going to collect on that ten years of depreciation.
With actual cash value coverage, you'll be compensated based on your roof's value in today's dollars and you'll have to pay the difference between the depreciated value of your roof and the cost of replacement, leaving you with a much higher expense out of pocket than just your deductible.
However, this type of coverage does typically come with lower monthly premiums.
Contact Your Insurance Company to Find Out Which Coverage You Have
Before you file a claim, call your insurance company, especially if you have coverage through a local agent. They'll be able to look at your policy and tell you whether you've got replacement cost value or actual cash value coverage.
It’s very common for homeowners to simply not know which type they have and you don’t want to be surprised to find out you won't be getting as much money as you expected when you file a claim.
Knowing what type of coverage you have won’t change how much money you’ll get once you do file a claim, but it will help you understand why you’re getting the amount that you do, especially if you expected more.