ACV and RCV are the two phrases that determine how much money your insurance carrier will actually send you for a hail-damaged roof. The difference between them is sometimes a few hundred dollars, sometimes tens of thousands. Most Colorado homeowners only learn the difference after they've filed a claim — and by then the policy was written years ago. This guide explains exactly how each one works, the depreciation math behind them, and the steps to release every dollar you're entitled to.
The 60-second answer
ACV (Actual Cash Value) pays the depreciated value of your roof — what it's worth today after age and wear. RCV (Replacement Cost Value) pays the full cost to replace your roof with new materials, but the depreciated portion is held back until the work is actually completed. Most modern Colorado homeowner policies are RCV with a depreciation holdback. Some older or budget-tier policies are ACV-only — and on a 15-year-old roof, that distinction can mean a check that covers the full replacement versus a check that covers half. Always read the declarations page of your policy to confirm which type you have, and confirm the holdback release process before signing any roofing contract.
ACV defined
Actual Cash Value (ACV) is the depreciated value of an item at the moment of the loss. The formula is approximately:
ACV = Replacement Cost − Accumulated Depreciation
For a roof, depreciation is calculated based on (a) the age of the roof, (b) the expected lifespan of the materials, and (c) any pre-loss wear. A typical asphalt shingle roof is depreciated over 20–25 years on a straight-line basis, depending on the carrier's actuarial table.
Concrete example. A 15-year-old asphalt shingle roof with a $20,000 replacement cost and a 25-year expected lifespan has accumulated 60% depreciation (15 ÷ 25). The ACV is $20,000 × (1 − 0.60) = $8,000.
If you have an ACV-only policy, the carrier sends you a single check for $8,000 (minus your deductible). That's the entire payment. Your roof costs $20,000 to replace — you cover the $12,000 gap from your own pocket.
RCV defined
Replacement Cost Value (RCV) pays the full cost to replace your roof with materials of like kind and quality. There is no depreciation deduction in the final total. However, RCV policies pay out in two checks, not one:
- The ACV check is sent first, shortly after the scope of loss is approved. This is the depreciated value of the roof — the same calculation as above.
- The recoverable depreciation check (also called the "depreciation holdback") is sent after the work is completed and documented. This second check covers the gap between the ACV and the full replacement cost.
Same example, RCV policy. Same 15-year-old roof, $20,000 replacement cost. The carrier:
- Sends an initial ACV check of $8,000 (minus your deductible) when the scope is approved
- Holds back $12,000 in "recoverable depreciation"
- Releases the $12,000 second check after the work is completed, documented, and a Certificate of Completion is submitted
If the project is completed at or below the approved scope, you receive the full $20,000 over two checks. If you elect not to do the work, or to have it done for less than the approved scope, the carrier keeps the recoverable depreciation. You only "recover" the depreciation by actually doing the work.
How to know which type you have
Look at the declarations page of your homeowner policy. The declarations page is the 1–2 page summary that lists your coverage limits, deductibles, and the basis on which losses will be paid.
You're looking for language under "Coverage A: Dwelling" or similar. The two phrases to find:
- "Replacement Cost" or "RCV" — your policy is RCV.
- "Actual Cash Value" or "ACV" — your policy is ACV.
If neither phrase is clear, call your carrier or your independent agent and ask: "Is my dwelling coverage on a replacement cost basis or an actual cash value basis?" Get the answer in writing.
A few additional wrinkles to watch for:
- Roof-specific endorsements. Some policies have an RCV dwelling but an ACV roof endorsement — meaning the roof itself depreciates even though the rest of the house is RCV. This is increasingly common in storm-prone regions including parts of Colorado.
- Roof age caps. Some carriers have automatic ACV downgrades on roofs over 15 or 20 years old, regardless of original policy type.
- "Functional replacement cost" — a hybrid that pays for like-kind materials but not for matching aesthetic or premium grade. Common in older homes.
Why ACV-only policies are a trap on older roofs
ACV-only policies are typically less expensive than RCV policies — sometimes meaningfully so. For new construction with a 0–5-year-old roof, the math difference is small because depreciation is small. But for any roof over 10 years old, ACV becomes a structural problem:
- At 15 years on a 25-year roof: ACV pays 40% of replacement cost. The homeowner covers 60%.
- At 20 years on a 25-year roof: ACV pays 20% of replacement cost. The homeowner covers 80%.
- At 25 years or older on a 25-year roof: ACV may pay nothing at all. The roof is "fully depreciated" in the carrier's view.
Combined with rising material and labor costs across the Front Range, an ACV claim on an older roof is sometimes barely worth filing. If you have an older roof and are still on an ACV policy, switching to RCV at your next renewal is one of the highest-leverage insurance decisions a Colorado homeowner can make.
The two-check process, step by step
For a typical RCV claim, the depreciation release process looks like this:
Step 1 — ACV check arrives
Within 1–4 weeks of the scope of loss being finalized, the carrier sends the ACV check. The check is typically made out to:
- You (the homeowner)
- Your mortgage company (if you have a mortgage)
- Sometimes your contractor (if you've assigned the claim)
The amount is the ACV total minus your deductible. Cash this check carefully — if you have a mortgage, the lender often holds the funds in an escrow account and releases them in stages.
Step 2 — The work is completed
The contractor performs the work according to the approved scope. Any changes to the scope (upgrades, code-required additions, repair items found during tear-off) should be documented and submitted as supplements. Completed work needs to match what the carrier approved — or exceed it.
Step 3 — Certificate of Completion is signed
Once the work is finished and you've walked the project with your contractor and confirmed satisfaction, you sign a Certificate of Completion (sometimes called a "Certificate of Satisfaction" or "Acceptance Letter"). This is the homeowner's formal statement that the work was completed.
Step 4 — Final invoice and photos are submitted to the carrier
The contractor (or you) submits to the carrier:
- The signed Certificate of Completion
- A final invoice matching the approved scope
- Photos of the completed work (often a final invoice will require this)
Step 5 — The recoverable depreciation check is released
Within 7–14 business days of receiving the final documentation, the carrier issues the recoverable depreciation check. This is the second and final payment on the claim. Like the ACV check, it may be made out jointly to you and your mortgage company.
Mortgage companies and the depreciation release
If your home has a mortgage, both the ACV check and the depreciation check will likely be made out jointly to you and your lender. The lender wants to confirm the work is being done before signing the funds over to you.
Most major lenders have a loss-draft department with its own claim portal and process. Common patterns:
- One-third / one-third / one-third release. The lender holds the funds in escrow and releases them in three installments: at signing, at midpoint, and at completion.
- Inspection-based release. The lender requires a third-party inspection at completion before releasing the full amount.
- Endorsement and forward. The lender simply endorses the check over to you once the contractor has begun work and an initial inspection confirms it's underway.
The exact process depends on your lender and the size of the claim. For claims under a certain dollar threshold (often $10,000–$40,000), some lenders waive the loss-draft process entirely.
This is one of the most underrated frustrations of a Colorado claim — homeowners who weren't expecting to deal with their mortgage company often spend hours on the phone waiting for forms. Hilltop handles the lender paperwork directly with our customers' mortgage companies — it's part of our 10-step process, and we don't leave you to figure out a lender-specific portal on your own.
Common ACV/RCV mistakes Colorado homeowners make
After 18 years of Front Range storm restoration claims, the same handful of mistakes show up every season:
- Not reading the declarations page until after a claim is filed. The first 5 minutes of reading your policy can save you from a $10,000 surprise.
- Choosing not to do the work after receiving the ACV check. The depreciation portion is forfeited. The carrier keeps it.
- Doing the work for less than the approved scope to "pocket the difference." This is insurance fraud and is prosecuted in Colorado.
- Letting a contractor disappear after the ACV check is cashed without completing the scope. The recoverable depreciation can never be released, and the homeowner is left with an incomplete project and a partial payment.
- Choosing materials that don't match the approved scope without supplementing first. If the scope says "30-year architectural" and you install "Class 4 impact-resistant," that's an upgrade — and it should be priced and documented as a supplement, not absorbed quietly.
- Misunderstanding what depreciation is "recoverable." Some policies use "non-recoverable depreciation" — meaning the homeowner never gets that portion back, even after completion. Confirm with your carrier.
What to do if your policy is ACV and you have hail damage
If you have an ACV policy and your roof is damaged by hail, you still have a claim — but the math is different. Steps:
- Get a free professional inspection to document the damage and produce a written report. This is true regardless of policy type.
- Request the adjuster's full scope of loss in writing. Even on ACV claims, the scope determines what gets paid.
- Ask your carrier specifically how depreciation will be calculated. Some carriers use straight-line, some use accelerated tables. The math affects the check.
- Consider whether the math justifies filing. A claim with a $5,000 ACV payment and a $5,000 deductible nets you nothing. If the deductible exceeds the ACV, the claim isn't worth pursuing.
- At your next renewal, switch to RCV if you can. The premium difference is usually meaningfully smaller than the next claim's difference.
A reputable contractor will help you do the math before you file. We do this on every Hilltop free inspection in the Front Range — including saying "don't file this one, it's not worth it" when the numbers don't work.
Colorado-specific notes
A few things worth knowing for Colorado specifically:
- Roof age caps are increasingly common. Several major carriers in Colorado now apply automatic ACV treatment to roofs over 15 years old, regardless of the underlying policy type. Read the endorsements section of your declarations page carefully.
- Class 4 impact-resistant shingles affect the math. Class 4 shingles often have longer expected lifespans (30+ years), which changes the depreciation curve. Some carriers also offer 20–30% premium discounts for Class 4 installations — read more in Class 3 vs Class 4 Shingles in Colorado.
- Bad faith claims apply. Under CRS 10-3-1115/1116, a Colorado homeowner whose carrier unreasonably delays or denies coverage may be entitled to two times the covered benefit plus attorney fees. We cover this in Denied Roof Claim in Colorado? Here's Your Playbook.
When to call Hilltop Contracting
If you're working through a hail or wind claim in the Denver Metro or Front Range and want help understanding your ACV vs RCV math — or you simply want to know what your roof will actually cost to replace — call 720-345-2070 for a free, no-pressure inspection.
We are an Aurora-headquartered roofing and storm-restoration company. Our team has 29 years of roofing experience, 18 years specializing in hail and wind insurance claims, and we have been on Colorado roofs since 2009. We attend every adjuster inspection, document supplements when scope comes back short, and handle the lender paperwork through to depreciation release.
We call back within one business hour — every time.
For the full claim playbook from initial inspection through final payment, read our Colorado Hail Insurance Claim Step-by-Step Guide.
This article is informational and reflects our team's experience handling Colorado hail and wind claims. It is not legal, insurance, or financial advice. Specific policy terms, depreciation tables, and entitlements vary by carrier and policy type — always read your declarations page or call your carrier directly to confirm your specific coverage and the math behind it.