RCV vs. ACV: why your first check is smaller than your estimate
Replacement cost value, actual cash value, and why insurers hold back depreciation until the work is done.
Minn. Stat. § 65A.08
The two numbers
Replacement cost value (RCV) is what it costs to replace your roof with new materials today. Actual cash value (ACV) is RCV minus depreciation — what your 12-year-old shingles were 'worth' the moment the hail hit.
Most Minnesota homeowner policies are RCV policies. But RCV policies still pay in two steps: first the ACV amount, then the rest after you actually complete the repairs.
A worked example
Say your roof replacement costs $30,000 (RCV), your shingles were halfway through their life so depreciation is $10,000, and your deductible is $2,500.
Check one arrives for $17,500 — that's the $30,000 RCV minus $10,000 depreciation minus your $2,500 deductible. After the roof is installed and you submit proof, check two arrives for the $10,000 'recoverable depreciation.'
That second check is the one people forget to collect. It's your money, but only if you finish the work and ask for it within the time your policy allows.
What to watch for
Check whether your policy pays RCV or ACV on roofs specifically — some carriers switch older roofs to ACV-only schedules by endorsement, which means the depreciation is never recoverable.
Watch the deadline to complete repairs and claim recoverable depreciation. Policies commonly require completion within a set period after the ACV payment, and extensions usually must be requested in writing.