Understanding Roof Coverage: Replacement Cost vs. Actual Cash Value vs. Payment Schedule

Michael Otomo
Apr 30
2 min read

When it comes to your homeowners insurance policy, not all roof coverage is created equal. Many homeowners don’t realize how their roof is covered until it's too late—when they file a claim and get a disappointing check.

At Hougom Insurance Agency, we believe in educating our clients so they can make smart decisions and avoid costly surprises. Let’s break down the key differences between Replacement Cost, Actual Cash Value (ACV), and Payment Schedule when it comes to your roof—and why it matters.

1. Replacement Cost (RCV)

What it is: Replacement Cost coverage pays to replace your roof with new materials of like kind and quality, without deducting for depreciation (wear and tear over time).

Why it’s good: You get the full value to replace your roof, even if it's 10, 15, or 20 years old.

2. Actual Cash Value (ACV)

What it is: ACV is the replacement cost minus depreciation. In other words, the older your roof is, the less money you’ll get from your insurance company.

Why it’s risky: If your roof is 15 years old and costs $15,000 to replace, your insurance company may only pay a small fraction of that—maybe $5,000 or less—leaving you to pay the rest out of pocket.

3. Roof Payment Schedule

What it is: Some companies use a roof payment schedule to limit what they’ll pay, regardless of the actual value. For example, they might only cover 40% of the roof’s cost once it’s over 10 years old.

Why it’s important to understand: Even if your policy says “replacement cost” elsewhere, a payment schedule could drastically reduce your payout.

Claim Example: Replacement Cost vs. ACV

Let’s say a windstorm damages your 15-year-old roof. The cost to replace it is $15,000.

With Replacement Cost coverage: Insurance pays the full $15,000 (minus your deductible). You get a brand-new roof.
With Actual Cash Value coverage: Roof is depreciated by 70%. Insurance pays $4,500. You have to come up with $10,500 yourself.

That’s a massive difference—and the last thing you want to deal with in the middle of a claim.

Why This Matters

Your home is likely your biggest investment. Roof coverage is one of the most important parts of your policy. Too many people focus on price and don’t realize they’ve been sold a bare-bones policy that won’t protect them when disaster strikes.

We strongly recommend making sure your policy includes Replacement Cost coverage on your roof—no ACV, and no payment schedule surprises.

Let’s Review Your Policy

Not sure what kind of roof coverage you have? Don’t wait until you have a claim to find out.

Call Hougom Insurance Agency today at 608.799.8434 and let us review your homeowners policy for free. We’ll make sure you’re protected the right way—no fine print, no confusion, just solid coverage you can count on.