TDI: Replacement Cost vs Actual Cash Value for Roofs

Replacement cost vs actual cash value—check before storm season bites

The Texas Department of Insurance’s tip on home policies: replacement cost or actual cash value explains a difference East Texas homeowners often discover after hail or wind damage: replacement cost coverage pays based on current repair costs (minus your deductible), while actual cash value subtracts depreciation for age and wear—so the same roof can pay far less.

TDI’s worked example (illustrative only): a covered storm destroys a roof that costs $10,000 to replace on a policy with a $4,000 deductible. Under replacement cost, the policy pays $6,000. Under actual cash value, a 5-year-old roof might pay $4,500, a 10-year-old roof $3,000, and a 20-year-old roof $0 after the deductible—because depreciation eats the rest.

Roof-specific gotchas TDI flags

TDI’s insurance and your roof tip adds practical checks: as roofs age, some companies switch to actual cash value; a poor-condition roof may not be covered at all; and wind/hail deductibles can differ from other deductibles. With replacement cost, insurers often pay in two checks—a partial payment first, then the rest after repairs start. Insurance will not pay for a new roof just because it is old or worn out.

This is consumer education from TDI—not a promise about your policy, claim amount, or contractor bid. Ask your agent what you carry before the next storm. When you do hire work, get multiple written bids and never sign a blank or deductible-waiver deal.

Takeaway: Know whether your East Texas policy is replacement cost or actual cash value—and confirm wind/hail deductibles—before damage forces the lesson.

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