How to Identify Different Home Policy Types
Greetings ZCI client family!
Have you ever thought about how to identify different home policy types? When is the last time you looked at your home policy to make sure you have the right coverage for you and your family? Do you have damage to your roof and now your insurance is only covering a small percentage of your claim?
Lately we have been seeing more confusion surrounding home policy types, so today we are going to break down the difference between RCV, ACV, and RPS policies*.
The two most common types are the RCV and ACV policies.
RCV stands for “Replacement Cost Value” where the insurance company is going to take care of the entire loss or entire cost to replace minus the deductible. So a $10,000 roof would be the $10,000 minus the $500 deductible for a total of $9,500.
The second policy type, ACV, stands for “Actual Cash Value” where the insurance company is only going to pay you for what the property damage is worth right now. The way insurance determines that is a process called depreciation which is when years of wear and tear of a product over its life time causes a reduction in the value of the product. Say a 25-year shingle is 12.5 years old. The shingle is 50% depreciated. So, if it is a $10,000 roof, the roof is now worth $5,000. ACV will pay the customer $5,000 depreciation value minus a $500 deductible for a total of $4,500. And then the customer is responsible for the rest of the repair or replacement costs because the depreciation is non-recoverable.
An easy way to find out which policy your claim is under, is to look at the last page of your claim. If the depreciation is in <> brackets, then the depreciation is non-recoverable and an ACV policy. If the depreciation is in () brackets, then the depreciation is recoverable and it is a RCV policy. You may also call your insurance company and ask them.
The third policy type is a RPS or “Roof Payment Schedule“, which is becoming a very prevalent type from AllState. This is listed as a RCV, BUT is actually an ACV in disguise! Over the years, the customer becomes more and more responsible for more and more of the roof payment schedule. This is a bad policy type because even if you can get the depreciation down by proving the product is not very worn down, you will never get out of paying your portion of the payment.
We advise that you check your home policy type to make sure you know which policy you have. Especially if you have Allstate or a similar company trying to pass a RPS policy as a RCV. It is much better to know now and change your policy than to find out you have a RPS when you roof is damaged in an unexpected storm.
Please contact us if you have any questions about your policy. We would love to help you.
– Your ZCI Family
*ZCI Residential is not a licensed adjuster or agent. Call your agent to verify coverage. Call us for construction needs.