RCV vs ACV explained: where your check actually comes from

This is the question we get asked more than any other. "The adjuster said my roof is approved for $18,000, but the first check is only $13,000. Where's the rest of my money?"

Nothing was stolen. Your policy is doing exactly what the dec page promised it would. But nobody explained how the timing works, and homeowners feel cheated when they should feel covered. Here is the plain-English version of RCV, ACV, and the two-check system.

The two terms, defined inline

Replacement Cost Value (RCV) is what it costs today to put a brand-new roof on your house. Materials, labor, dump fees, permits, the whole job. RCV is essentially what a contractor would charge to do the work, in current dollars.

Actual Cash Value (ACV) is RCV minus depreciation — the carrier's estimate of how much wear your existing roof has already burned through.

Depreciation is the wear part. If a 25-year roof is 10 years old, the carrier figures it has used up 40% of its life. That 40% comes off the top.

On a true RCV policy, you eventually get the full replacement cost back. The catch is the timing — and the catch is where most homeowners get confused.

Why insurers split the check in two

Carriers learned a long time ago that some homeowners would take a full RCV check, cash it, and never replace the roof. Maybe they used the money for something else; maybe they hired the cheapest crew in town and pocketed the difference. Either way, the carrier ended up paying for a brand-new roof that never got built.

So the industry standard became: pay ACV up front, hold back the depreciation, release it after the work is verified. The depreciation portion is called "recoverable depreciation," meaning you can recover it once you actually replace the roof.

The mechanics are straightforward. The contractor does the work. The contractor submits the final invoice plus photos of the completed job to the carrier. The carrier releases a second check for the held-back depreciation. That check goes to you, and you pay the contractor in full.

A worked example, kitchen-table version

This is the same example we walk through with homeowners on a free inspection. Numbers rounded for clarity.

Say your roof has hail damage that totals out the slopes. The adjuster scopes it and approves:

The first check. Once the claim is approved, the carrier mails an ACV check minus your deductible. That is $14,000 minus $1,000 = $13,000. This is the check that confuses people. They look at the approved amount of $18,000 and the check for $13,000 and assume the carrier is short-changing them.

The roof gets installed. The crew shows up, tears off the old roof, installs the new one. Permit gets signed off. Final invoice goes to the carrier with photos.

The second check. The carrier releases the depreciation portion. That is the held-back $4,000, sometimes called the "recoverable depreciation" check or"supplement payment."

Total received: $13,000 + $4,000 = $17,000. That covers the $18,000 RCV minus your $1,000 deductible. The math works out exactly the way the policy promised. The deductible is the only money that came out of your pocket.

That is the full RCV settlement, just delivered in two pieces over the course of about two months.

The trap: ACV-only policies

Some policies do not pay RCV at all. They settle on ACV, period. There is no second check.

On the same scenario above, an ACV-only policy would pay you $14,000 minus the $1,000 deductible — $13,000 total, end of story. You are responsible for the $4,000 gap.

This shows up in two situations:

• The cheap-tier policy. Some carriers offer an ACV-only roof endorsement at a lower premium. Homeowners often pick it without realizing what they gave up.
• The age-triggered conversion. Several carriers in NC added clauses in the past five years that automatically convert a roof from RCV to ACV once it hits a certain age — usually 10, 15, or 20 years. A 16-year-old roof on a policy with this clause settles at ACV even though the rest of the policy is RCV.

If you are not sure which one you have, read how to read your declarations page — the loss-settlement clause spells it out.

How depreciation actually gets calculated

Most carriers use what is called straight-line depreciation. Take the age of the roof, divide by the expected useful life, multiply by the RCV. That is the depreciation amount.

Common useful-life numbers carriers use:

• 3-tab shingle: 20 years.
• Architectural / dimensional shingle: 25 years.
• Premium architectural: 30 years.
• Standing-seam metal: 40 years.

Carrier software does the math automatically. The number you see on the loss summary as "depreciation" is rarely negotiable on the age portion. What is negotiable is the underlying scope — line items the adjuster missed, code upgrades not included, and matching issues. That is where a roofer working for you earns their keep, not in arguing depreciation percentages.

What you should do with this information

Three things, in order:

1. When the first check arrives and looks "short," do not panic. Compare the check amount to the loss summary's ACV line, minus your deductible. If those match, the system is working as designed. The second check is on its way once the work is done.
2. Make sure the contractor invoices the carrier with photos and a final scope. Skipping this step is the most common reason homeowners never see the recoverable depreciation. Some homeowners pay the contractor in full, the contractor never files the recovery paperwork, and the second check just never comes.
3. If anything in the scope changed between the original adjustment and the actual work — hidden decking damage, code-upgrade items missed — that goes in as a supplement.

On every claim we run, we walk the homeowner through what each check is, when to expect it, and what we are submitting to the carrier on their behalf. See how we handle claims — or, if you want us to look at your specific policy, send the dec page over and we will tell you what your check is going to look like.