What is roof replacement cost insurance coverage?
Short answer. Replacement cost coverage pays what it actually costs to replace a damaged roof with new materials of like kind and quality, without a permanent deduction for the roof's age. The insurer usually holds back depreciation until the roof is replaced, then releases it. Many policies take this coverage away from older roofs through endorsements that pay actual cash value or a percentage schedule instead.
Replacement cost versus the alternatives
- Replacement cost: pays the full cost to replace, minus the deductible, once the work is done.
- Actual cash value: pays replacement cost minus depreciation. On an older roof, depreciation can be most of the cost.
- Roof payment schedule: pays a fixed percentage of the replacement cost based on roof age and material.
How to tell what you have
- Check the declarations page for the dwelling loss settlement type.
- Read every endorsement for roof surfacing, actual cash value roof, or payment schedule language. An endorsement can change the roof alone while the rest of the house stays at replacement cost.
- Ask your agent: if hail destroyed my roof tomorrow, would I get the full replacement cost minus my deductible?
What can take it away
- Roof age thresholds at a new policy or renewal
- Switching insurers, since a new company may apply its own roof terms
- Roof material, with some insurers treating certain materials differently
How to keep or regain it
- Maintain the roof so it passes exterior inspections.
- Replace an aging roof on your own schedule, which often restores replacement cost terms.
- Compare roof terms, not just premiums, when you shop.
Learn more in ACV vs RCV, payment schedules and roof age and insurance.