ACV vs RCV on an Alberta Roof Claim — and How to Tell Which You Have

This is the part of a roof claim that surprises people. The insurer approves a $14,000 replacement, the cheque arrives for $4,600, and the homeowner assumes something has gone wrong. Usually nothing has — that is simply how the policy settles.

Replacement Cost Value (RCV)

RCV pays what it costs to replace the roof today, with no deduction for age. It normally settles in two payments:

1. The actual cash value payment, issued after the scope is approved. This is the replacement cost minus depreciation minus your deductible.
2. The recoverable depreciation, released after the work is finished and you submit the final invoice and completion photographs.

The second payment is conditional on actually doing the work. That is the entire point of the hold-back, and it is the payment homeowners most often fail to claim.

Actual Cash Value (ACV)

ACV pays the depreciated value of what you lost, full stop. A 15-year-old asphalt roof with a 25-year expected service life has used roughly 60 per cent of its life, so the settlement reflects roughly 40 per cent of replacement cost, minus the deductible. There is no second cheque. The gap is yours to fund.

One material-specific warning before the arithmetic. Where a policy carries a cosmetic damage exclusion — most often applied to metal roofing — damage that affects appearance but not function may not be paid at all, whichever settlement basis you are on.

The same claim, both ways

Round numbers used to show the mechanism. Depreciation schedules vary by insurer, material and roof age, and your approved scope and deductible will differ.

How to tell which one your roof is on

The answer is in your own paperwork, and it takes about ten minutes to find. Do this before a storm rather than during one.

Step 1: find your declarations page

Sometimes called the “coverage summary” or “policy schedule”. It is the two-to-four page summary at the front of your policy documents, and your broker can email it in minutes. It lists your coverage limits, your deductible, and — critically — your endorsements.

Step 2: read the dwelling coverage basis

Look for the wording attached to Coverage A, the dwelling itself:

• “Replacement cost” — RCV. Good news, subject to step 3.
• “Actual cash value” or “depreciated value” — ACV.
• “Guaranteed replacement cost” — RCV with an extension above the stated limit.

Step 3: read the endorsements. This is the step people skip

Your dwelling can be on replacement cost while your roof specifically is not. Look for any endorsement with these words in the title:

• Roof surfacing endorsement — typically applies ACV to the roof once it passes a stated age, often with a depreciation schedule attached.
• Roof age limitation or roof settlement schedule — the same idea in different wording, usually with a table by roof age and material.
• Cosmetic damage exclusion — excludes appearance-only damage. Mostly bites on metal.
• Hail or wind deductible — a separate, usually higher deductible. Check whether it is a flat amount or a percentage of the insured value, because the difference is enormous.

Where the base policy and an endorsement disagree, the endorsement wins. That is what an endorsement is for, and it is exactly why this step matters.

Step 4: the four questions for your broker

Email them and ask for the answers in writing, so you have them when it matters.

1. Is my roof settled at replacement cost or actual cash value? If ACV, what is the depreciation schedule?
2. Do I have a separate hail or wind deductible? Flat amount or percentage?
3. Is there a cosmetic damage exclusion on my policy?
4. Would a Class 4 impact-rated roof earn a premium credit with this insurer?

Why Alberta insurers increasingly write roofs on ACV

After the record hail losses of recent years — the 5 August 2024 Calgary hailstorm alone produced about $2.8 billion in insured damage and more than 130,000 claims (Insurance Bureau of Canada), making it one of the costliest insured events in Canadian history — insurers have been tightening roof coverage across the province. The common mechanisms are a roof surfacing endorsement that applies ACV once the roof passes a certain age, a separate and higher hail or wind deductible, and in some policies a cosmetic damage exclusion.

None of these are hidden. They are in your policy wording. The problem is that almost nobody reads the endorsements until after a storm.

Recoverable depreciation: the second cheque

On an RCV policy the insurer does not hand over the whole approved amount at once. It pays the actual cash value first and holds back the depreciation — the recoverable depreciation — until the work is finished and evidenced. On the example above, that hold-back is $8,400 on a $14,000 roof. It is frequently the larger half of the settlement, and it is the single most commonly forfeited part of a roof claim.

What releases it: the final invoice for the completed work, completion photographs slope by slope, and, where the insurer asks for one, a sworn proof of loss. Send them together rather than piecemeal. What a complete photo set looks like is on photographing a roof for an insurance claim.

Who receives it: you do. It is your money, paid to you, and you pay the contractor. If your mortgage lender is named on the cheque because of the amount, expect an extra step and allow time for it.

Non-recoverable depreciation is a different thing entirely: it is depreciation that is never paid, which is what ACV settlement is. If your policy calls the deduction non-recoverable, there is no second cheque to chase.

There is a deadline. Policies set a period for completing the work and submitting the invoice — read yours, because a claim that sits unbuilt past it converts an RCV settlement into an ACV one in practice. If the build queue after a major storm is running long, tell the adjuster in writing and get the extension on the record.

If you are on ACV and the gap is large

You have real options, none of which involve anyone pretending to cover your deductible. You can phase the work, starting with the slopes that are actually failing. You can finance the difference. You can revisit the scope: if decking replacement or code-required membrane was omitted, a supplement raises the approved amount and therefore both payments. And at renewal you can ask about moving back to replacement cost.

See also how the claim process runs, financing a roof in Edmonton, and the claims overview for coverage and deductibles. If the insurer has refused the claim outright rather than depreciated it, start with a denied roof claim.