Insurance estimates use their own language. Once you know a handful of terms, you can see exactly what you're being paid for and spot what might be missing.
The terms that matter
- RCV (replacement cost value): what it costs to replace the damaged items with new ones today.
- Depreciation: an amount subtracted for the age and wear of what was damaged.
- ACV (actual cash value): RCV minus depreciation. Many policies pay this first.
- Recoverable depreciation: depreciation you can get back after the work is finished, if your policy pays replacement cost. Check whether yours says "recoverable" or "non-recoverable."
- Deductible: your share of the claim. It's subtracted from what the insurer pays.
- Square: roofers measure roofs in squares. One square is 100 square feet.
- Waste: extra material added for cutting and fitting, usually listed as a percentage.
- O&P (overhead and profit): a contractor's overhead and profit, included on some claims.
An example
These numbers are only an example, to show how the math usually works on a replacement cost policy:
| Line on the estimate | Amount |
|---|---|
| Replacement cost value (RCV) | $18,000 |
| Less recoverable depreciation | −$5,000 |
| Actual cash value (ACV) | $13,000 |
| Less deductible | −$1,500 |
| First payment from the insurer | $11,500 |
| Depreciation released after the work is done | $5,000 |
| Total paid by the insurer | $16,500 |
In this example, the insurer pays $16,500 in total and the homeowner pays the $1,500 deductible, which covers the full $18,000 cost. If your mortgage company is listed on your policy, its name may appear on the checks too.
What to check on your estimate
- Roof size: does the number of squares match your roofer's measurements? Missing a slope can cut thousands.
- Every slope: was the whole roof included, or only some sides?
- Materials: are drip edge, starter, ridge cap, flashing and vents listed?
- Waste: is the percentage realistic for a roof with lots of hips and valleys?
- Other damage: are gutters, screens, siding and fences from the same storm included?
- Code items: are items your city requires for a new roof included?
Colorado law doesn't allow roofers to pay, waive or rebate your deductible. A roofer who offers to "cover your deductible" is breaking the law. The Charity Roofs $1,000 donation is different: it goes to the charity or church you choose, never to you, and doesn't change your claim.
Questions about your estimate? We'll explain the repair scope line by line at no cost. Your insurer settles the claim with you.
This guide is general information for Colorado homeowners, not legal advice. Your policy's wording controls your coverage, so read it or ask your agent about your specific situation.