First, let’s get the insurance question out of the way: Will my homeowner’s insurance cover my roof leak?
Since Arizona is not subject to annual hail or storms like Texas, Oklahoma or Kansas, most Arizona property owners have little knowledge of what is covered by their insurance. Many are under the impression that their insurance will cover roof repair or roof replacement.
Obviously, insurance policies differ between insurance companies, types of coverage, and individual states’ laws. Every homeowner should understand what their Insurance actually covers.
There are two basic coverage’s on your policy that you should be aware of in your homeowner’s policy.
Actual Cash Value (ACV)
Actual Cash Value (ACV) is computed by subtracting depreciation, which is based on age and condition of your roof– from the roof replacement cost.
Replacement cost is another method of valuation. An example would be as follows: You purchased a new roof in 1990 for $6000. The
replacement cost of that roof’s value in today’s market is $10,000. Actual Cash Value (ACV) insurance would only pay the Actual Cash Value of your roof at the time of loss. The ACV would be the replacement cost (at today’s prices), less depreciation. In this example, the insurance company may pay an
estimated cost of $4,500 for your new roof less your deductible.
Replacement Cost Value (RCV)
Replacement Cost Value (RCV) is the amount that an insurance
company would pay, at the present time, to replace your roof. In the example above, the roof replacement cost is $10,000. The insurance company would pay out the value of the roof in today’s market of $10,000, less your deductible. Most likely, you have Replacement Cost Value type coverage; which entitles you to have your roof replaced with like kind and quality when it is of equal or better condition then it was before the damage occurred.