How does it affect a claim payment?
Let’s look at how your insurance company will pay for roof damage depending on the type of coverage you have. The house in these examples is insured for $200,000 with a 2% ($4,000) deductible. The entire roof was damaged by a storm that insurance covers. The value of your house and amount of your deductible may be different.
| Replacement cost coverage |
|---|
|
If it costs $10,000 to replace the roof, a replacement cost policy will pay the same amount no matter how old the roof is: Cost to replace roof $10,000 Minus deductible - $4,000 Policy would pay $6,000 |
| Actual cash value coverage | |||
|---|---|---|---|
| If it costs $10,000 to replace the roof, the amount an actual cash value policy will pay depends on how old the roof is: | |||
| 5-year-old roof | 10-year-old roof | 20-year-old roof | |
| Actual cash value of roof | $8,500 | $7,000 | $4,000 |
| Minus deductible | - $4,000 | - $4,000 | - $4,000 |
| Policy would pay | $4,500 | $3,000 | $0 |