Before we delve into the topic of roof depreciation, replacement costs, and all her sisters, let’s get a better understanding of what these terms even mean.
Aging is an inevitable aspect of nature; everything from trees to devices and appliances, furniture, clothes, and even your roof all tend to deteriorate as time goes by. Wears and tears are just one of life’s beauties, and its consequent result is the reduction in the value of some owned properties. This reduction goes by the term ‘depreciation.’
When it comes to your home features, particularly your roof and all its related insurance claims, here are some terms you should probably familiarize yourself with:
Depreciation – As already mentioned, depreciation is the inevitable loss or reduction of the value of an owned property due to natural or artificial factors like aging, usage rights, perishability, natural resource usage, or failure to perform functionally.
Replacement Cost Value (RCV) refers to all expenses invested into the replacement process of a destroyed, damaged, or depreciated item. Due to recent trends and laws, many insurance policies double as Replacement Costs (RCs), as they perform dual functions of insuring the owned property and then covering the relevant costs in the event of its damage or destruction.
However, claiming one’s payment for damaged property has become a sort of herculean task in recent times. This development leaves many victims to the option of using their private funds to replace the items and then sending proof of payment to the insurer, demanding a total amount of the owed balance.
Actual Cash Value (ACV) is the actual value of any item at original purchase. The ACV refers to the items’ initial price or value before depreciation. Under normal circumstances, a ready buyer would purchase such an item at its ACV. In situations where an ACV policy is binding, one might have to bargain for lower depreciation rates on specific items.
How does it all work?
The content claim process goes like this;
An adjuster aids the claimant in arranging a list of damaged property, clearly stating their replacement costs, estimated values, and age. The insurers usually appreciate property based on specific qualities like wear and tear. They then make payment for the Actual Cash Value (ACV) of the entire property list.
Remember this About Roof Depreciation:
Depreciation is relative, based on individual evaluation and ratings, so don't let anyone play on your intelligence. Ask questions and query depreciation values if possible.
Frequently Asked Questions:
Do I have to pay with my money first?
Well, yes, you do. The way most insurers operate these days requires you to cover the costs from your pocket before being reimbursed.
How do insurance companies calculate roof depreciation?
Here's how it works most of the time; if the roof is 20 years old as of the time of loss, a 40% subtraction is done. It then becomes; 20 years multiplied by 4% a year. The resulting value is deducted from the cost of replacement. Also, the condition of the item plays a significant role in determining depreciation costs and ACVs.
I have a replacement cost policy, so why did my items still get depreciated?
The only reason why your insurance adjuster still depreciates your items is that some clauses in your replacement cost policy permit them to do that. It's all legal stuff.
Why is the process so complicated?
The process is thorough, in-depth, and helps to prevent fraud for all parties involved. In the end, it is to the benefit of everyone.
You can always negotiate.
Don't forget that depreciation is always negotiable. If your insurer over depreciates your property, you have everything to lose, so try to pitch for more. It's not like any hard and fast rules particularly apply to the depreciation process; it is primarily personal interpretation and evaluation.
Age Doesn't Count
Older property sells even better in recent times, especially as thrift items and vintage property are a trend. Don't make the mistake of selling yourself and your property short because of age.
If all this still confuses you,
Talk to us at APD Roofing! If you still cannot replace damaged items at your propertys’ replacement cost, we can help you with that. We only want the best for you, and we are dedicated to providing the best only.
MELVYN E HUCKABY II
Lead Claims Consultant, IICRC Certified