The Money: Deductibles, Depreciation & Checks

What is my deductible and do I have to pay it?

Your deductible is the portion of any covered loss you agreed to pay yourself when you bought the policy. If your roof claim is approved for $20,000 and your deductible is $2,000, the insurance company's responsibility is $18,000 — the other $2,000 is yours. The insurer doesn't collect it from you; they simply subtract it from what they pay, and you make up the difference when you pay your contractor.

Check your declarations page for the amount. Many Illinois policies now carry a separate wind/hail deductible that's a percentage of your dwelling coverage (1% or 2% is common) rather than a flat dollar amount — on a home insured for $300,000, a 2% wind/hail deductible is $6,000, which surprises a lot of people.

And yes, you genuinely have to pay it. That's not just how policies work — in Illinois it's the law.

If money is tight, talk to your contractor about legitimate options like payment timing or financing — those are fine. Making the deductible "disappear" is not.

What is Actual Cash Value (ACV)?

Actual Cash Value is what your damaged property was worth in its used, aged condition right before the storm — not what it costs to replace with new. The formula is simple:

ACV = Replacement Cost Value (RCV) − Depreciation

Depreciation is a deduction for age and wear. A roof with a 30-year expected life that's 15 years old has, in the insurer's math, used up roughly half its value. So if replacing it new costs $20,000, its ACV might be around $10,000. (Insurers calculate depreciation by age, condition, and expected lifespan; the exact schedule varies by carrier.)

Why ACV matters to you:

• It's the basis of your first check. On most claims, the initial payment is ACV minus your deductible. See why you got two checks.
• Some policies stop at ACV. If you have an ACV-only policy — or an ACV roof endorsement, which carriers increasingly add for older roofs — depreciation is never paid back, and the ACV payment is all you get. That's called non-recoverable depreciation.
• It's why the first check looks so small. An older roof carries heavy depreciation, so the ACV check can be a fraction of the replacement cost.

Whether your depreciation comes back to you depends on having replacement cost coverage — covered next under RCV and recoverable depreciation. Check your declarations page or ask your agent which type you have; it's one of the most important facts in your whole claim.

What is Replacement Cost Value (RCV)?

Replacement Cost Value is the full cost to replace your damaged property with new materials of like kind and quality, at today's prices — no deduction for age or wear. If a new roof comparable to yours costs $20,000 installed, that's the RCV, whether your old roof was 3 years old or 23.

Most Illinois homeowner policies are RCV policies for the dwelling, and here's how payment actually flows on one:

1. The insurer calculates the RCV of the covered damage.
2. They subtract depreciation to get the ACV, subtract your deductible, and pay that as the first check.
3. After the work is completed and invoiced, they pay the withheld depreciation — the second check. That's recoverable depreciation.

So an RCV policy doesn't hand you the full replacement cost up front; it gets you there in stages, with the last stage conditioned on actually doing the work. "Like kind and quality" is also worth noting: RCV pays to replace what you had — architectural shingles for architectural shingles — not to upgrade. If you want a nicer roof, see choosing a more expensive roof.

Two caveats. Some policies apply roof-specific ACV endorsements or "roof payment schedules" that limit or eliminate depreciation recovery on roofs specifically, even when the rest of the policy is RCV. And RCV amounts can be revised upward through supplements when items are missing. Read your declarations page — the ACV-vs-RCV distinction is worth thousands of dollars.

What is recoverable depreciation?

Recoverable depreciation is the age-and-wear deduction your insurer withholds from the first payment and pays back after the repairs are completed. It only exists on RCV (replacement cost) policies — it's the mechanism that turns your ACV first check into a full replacement-cost payout, without letting people collect new-roof money and never fix the roof.

A worked example, with a $2,000 deductible:

• RCV of the roof: $20,000
• Depreciation withheld: $8,000
• First check (ACV − deductible): $20,000 − $8,000 − $2,000 = $10,000
• Second check after completion: $8,000 (the recoverable depreciation)
• You pay your deductible directly to the contractor: $2,000

To collect it, you typically send the carrier a completion invoice (some also want photos or a certificate of completion) showing the work was done. Most policies set a time limit for claiming recoverable depreciation — often 180 days to a year or more after the loss or the ACV payment. Check yours, and don't sit on it.

Contrast this with non-recoverable depreciation: on ACV-only policies or roofs with ACV endorsements, the withheld depreciation is never paid, period. If your carrier's paperwork says "non-recoverable," the ACV check is the final word on that item.

Note the depreciation is released based on completing the insured scope — if your final invoice comes in lower than the RCV, many carriers pay depreciation only up to what you actually spent.

Why did I receive two insurance checks?

Because RCV claims are paid in stages by design. Nothing is wrong — this is the normal payment structure for a replacement-cost roof or siding claim:

1. First check: ACV minus your deductible. Issued after the claim is approved. It's the depreciated value of your roof, minus your share. This is why the first check often looks alarmingly small compared to the estimate's total — see what ACV means.
2. Second check: recoverable depreciation. Issued after the work is completed and you (or your contractor) send the final invoice. See how to collect it.

You may actually receive more than two. If your contractor documents missing items and the carrier approves a supplement, that arrives as an additional payment. Ordinance-or-law (code upgrade) amounts are sometimes paid separately too, after the code work is verified.

A few practical tips:

• Match each check to the paperwork. Every payment comes with (or follows) an explanation or revised estimate showing what it covers.
• Don't treat check one as the budget for the whole job. The full claim value is the RCV on the estimate, not the first deposit.
• If a check has your lender's name on it, that's a separate wrinkle — see the mortgage company question below.

Why is my mortgage company listed on my check?

Because your lender has a legal financial stake — called an insurable interest — in the house that secures your loan. Your mortgage agreement and your insurance policy both name the lender as a "mortgagee," so on larger claim checks the carrier makes payment out to both of you. Neither of you can cash it alone.

This is routine, not a mistake, and lenders handle it through a department usually called loss draft (sometimes "insurance loss" or "property claims"). The typical process:

1. Call the loss draft department — the number is on your mortgage servicer's website. Ask for their exact requirements and their endorsement mailing address.
2. Send them the check and paperwork. Commonly requested: the adjuster's estimate, your contractor's contract or W-9, and a claim form of theirs.
3. Small checks are often endorsed and returned to you directly. Larger ones (thresholds vary by servicer, often somewhere around $10,000–$40,000) go into an escrow account and are released in draws — for example a third up front, a third mid-job, the rest after completion.
4. Before the final draw, many lenders require an inspection of the finished work and a signed lien waiver (a document from the contractor confirming they've been paid and won't place a lien on your home).

Start this process early — lender processing is often the slowest step in the whole claim, and your contractor's schedule may depend on it. Keep copies of everything you mail, and use tracked shipping for endorsed checks.

Can I keep the insurance money instead of doing the repairs?

Sometimes, partly — but it's rarely as simple or as smart as it sounds. The honest breakdown:

• The ACV payment may be yours to keep under many policies, if no lender is involved. The first check compensates you for the loss in your property's value; most policies don't force you to repair. Read yours — some have repair requirements for certain coverages.
• The depreciation is not. Recoverable depreciation is only paid after completed, invoiced work. Skip the repairs and you forfeit that entire portion — often the difference between half the roof's value and all of it.
• Your lender can require repairs. If there's a mortgage, the check likely names the lender (see above), and lenders generally insist insurance funds actually restore their collateral. Pocketing escrowed funds isn't an option.

Even where keeping the ACV is allowed, understand what you're taking on:

• Future claims can be denied. If the unrepaired damage leads to a leak next spring, the resulting interior damage traces back to a loss you were already paid for — carriers deny those.
• Your policy itself is at risk. Carriers inspect roofs at renewal. A known-damaged, unrepaired roof is a common reason for nonrenewal, and a bad roof makes shopping for new coverage hard.
• Disclosure at sale. Known, unrepaired storm damage is something you'll have to reckon with when selling the house.

If you're considering this route, get your carrier's rules in writing first and confirm there's no lender requirement.

Can I choose a more expensive roof than I had?

Yes — you can put any roof you want on your own house. What you can't do is make the insurance company pay for the upgrade. Your policy owes like kind and quality: replacing what you had with new materials of comparable type and grade. If you had standard architectural asphalt shingles, the claim pays for standard architectural asphalt shingles.

The math works like this: the insurance pays its RCV amount for a like-kind replacement, and you pay the difference between that and the upgraded system out of pocket, on top of your deductible. Want to go from architectural shingles to designer shingles, standing-seam metal, or add upgraded underlayment beyond code? Your contractor prices the upgrade delta, and that portion is a private transaction between you and them.

A few things that are not upgrades, and shouldn't cost you extra:

• Code-required items — ice & water shield, drip edge, proper ventilation — are owed under ordinance-or-law coverage when local code requires them, not billed to you as extras. See code-required work.
• Discontinued materials. If your exact shingle no longer exists, the nearest comparable current product is like-kind replacement, not an upgrade. See discontinued shingles.
• Manufacturer requirements that come standard with a proper installation (starter strip, ridge cap).

Claim-time is actually a cost-effective moment to upgrade, since you're only paying the difference rather than a whole roof. Just get the upgrade priced as a separate, clearly itemized line in your contract so the insurance scope and your out-of-pocket portion stay distinct.

What happens if repairs cost more than the estimate?

It depends on why the costs are higher — and in most storm-claim situations, the answer is not "you're stuck with the bill."

• The estimate is missing items or underpriced. This is the most common case, and it's what the supplement process exists for. Your contractor documents the missing drip edge, flashing, steep charges, or code items with photos and measurements, submits it to the carrier, and the carrier revises the estimate and pays the difference.
• Hidden damage appears mid-job. Rotted decking or extra shingle layers discovered at tear-off get photographed and supplemented the same way — see rotten decking and adding damage later.
• Prices rose between the estimate and the build. Carriers can update pricing if the delay is documented and reasonable; your contractor can request a repricing as part of a supplement.
• You chose upgrades. That difference is legitimately yours — see above.

Protect yourself with the contract: with a storm-claim contractor, the usual arrangement (often called a contingency agreement) is that the contractor performs the insurance-approved scope for the insurance-approved price, deductible included, with supplements handled between the contractor and carrier. Make sure yours says who bears the risk if a supplement is denied — before work starts, not after.

If the carrier simply refuses to pay documented, reasonable costs and the dispute is about the amount, your policy's appraisal clause is the built-in tiebreaker; a complaint to the Illinois Department of Insurance is another lever. See disputes and denials.