What does actual cash value mean?

What actual cash value means, and how depreciation is applied

Actual cash value is the standard insurance-industry formula: replacement cost minus depreciation. Replacement cost is what it would cost, at today’s prices, to install a new roof of like kind and quality. Depreciation is a deduction for the age, wear, and remaining useful life the old roof had already used up before the loss. The result — ACV — is meant to represent what the damaged roof was actually worth immediately before it was damaged, not what a brand-new one costs.

This is the companion concept to replacement cost coverage, covered in a separate guide (see “Replacement Cost” under coverage explainers). Where a replacement cost settlement eventually pays the full cost of the new roof once it’s installed, an ACV settlement stops short of that: it pays the depreciated value and nothing more, unless the policy or state law requires an additional step.

Florida does not set a fixed statewide depreciation rate or schedule that applies to every roof and every carrier. Depreciation percentages come from the adjuster’s estimate (often using standardized estimating software such as Xactimate) or from a schedule built into the specific policy form. Two carriers can depreciate the same 15-year-old shingle roof by different percentages depending on the material, the roof’s condition at inspection, and the depreciation tables each uses.

How an ACV roof settlement is calculated

In practice, an ACV roof claim is settled in two steps. First, the adjuster (or the adjuster together with a contractor’s estimate) prices the full cost to replace the roof with new materials of similar kind and quality — the replacement cost figure. Second, the insurer applies a depreciation percentage to that figure based primarily on the roof’s age relative to its expected useful life, and secondarily on its documented condition (prior repairs, wear, granule loss, and similar factors noted at inspection).

The formula is: Replacement Cost − Depreciation = Actual Cash Value. For example, a roof that’s used up roughly half its expected useful life would typically see a depreciation deduction in that range. The exact percentage an adjuster applies varies by carrier, material, and the roof’s actual documented condition — there’s no single statewide table that fixes the number. The ACV figure, less the applicable deductible, is what the insurer pays.

When a Florida policy switches from replacement cost to ACV

Most Florida homeowners policies are written on a replacement cost basis for the dwelling, including the roof. Under Florida Statute §627.7011(3)(a), when a dwelling is insured on a replacement cost basis, the insurer must initially pay at least the actual cash value of the loss, less any applicable deductible. The insurer then pays the remaining “recoverable depreciation” once repairs are actually performed and expenses are incurred. In other words, on a standard replacement cost policy, ACV is the first check, not the final one — the rest follows once the roof is actually replaced.

Whether a policy pays full replacement cost on the roof specifically, or is written so the roof settles on an ACV-only or scheduled basis regardless of that two-step process, is set by the policy form itself, not by a single statewide statute. Many Florida carriers write roofs above a certain age on an ACV-only or roof-schedule basis as a condition of the policy, particularly for aging shingle roofs, and disclose that basis in the declarations or a roof endorsement. Homeowners should check their own declarations page and any roof-specific endorsement to see which basis applies to their roof, since this varies by carrier and by policy.

Separately, Florida law protects roof age in a different way. Under §627.7011(5), for policies issued or renewed on or after July 1, 2022, an insurer may not refuse to issue or renew a homeowners policy solely because the roof is less than 15 years old. For roofs 15 years or older, the insurer must allow the homeowner to get an inspection at their own expense before requiring roof replacement as a condition of coverage. If that inspection shows 5 or more years of useful life remaining, the insurer cannot refuse to issue or renew based on age alone. That provision governs whether a carrier can decline or nonrenew a policy over roof age — it’s a separate question from how a given claim is priced once it’s filed.

What is a roof payment schedule, and how does it change a settlement?

A roof payment schedule — sometimes called a scheduled roof settlement or roof depreciation schedule — is a policy endorsement some Florida carriers use instead of a simple ACV-versus-replacement-cost split. Instead of calculating depreciation individually at claim time, the endorsement sets a fixed table of payout percentages tied to the roof’s age and material, agreed to when the policy was written. When a covered roof loss occurs, the insurer pays whatever percentage the table assigns for that roof’s age bracket, applied to the replacement cost estimate — not an individually assessed depreciation figure.

The practical effect is similar to ACV but can be less favorable to the homeowner. A roof schedule’s percentages are fixed and typically front-load steep drops as the roof ages. Any depreciation withheld under the schedule is usually non-recoverable — there’s no later payment once repairs are completed, unlike the recoverable-depreciation step that applies to standard replacement cost claims under §627.7011(3)(a). Homeowners should look for a roof schedule endorsement by name on their declarations page or policy documents, since it’s a distinct provision from the ACV-versus-replacement-cost coverage choice described above.

Roof age thresholds that push a policy onto ACV

There is no single statewide age at which every Florida carrier switches a roof to ACV or a payment schedule. The trigger age is set by each carrier’s policy form and underwriting rules, not by state law. Carriers commonly tighten roof coverage terms somewhere in the range of roughly 10 to 20 years of age. The exact age varies by both carrier and roofing material: asphalt shingle roofs have a shorter expected service life and are typically restricted earlier than tile, metal, or slate roofs, which carriers often treat as durable for longer. Citizens Property Insurance Corporation, the state-backed insurer of last resort, publishes its own roof-age underwriting guidelines, which have historically distinguished shingle roofs from tile, metal, and slate roofs with materially different age allowances.

Because these thresholds are set policy-by-policy and carrier-by-carrier rather than by a single statute, the only reliable way to know which basis applies to a specific roof is to check that policy’s declarations page and any roof endorsement, or ask the carrier or agent directly which basis — replacement cost, ACV, or a payment schedule — applies to the roof at its current age.