REAL WORLD DEDUCTIBLE EXAMPLE – Insurance sends a field adjuster to your home to evaluate or scope the hail damage after a specific storm that has damaged your entire roof, gutters, dented your garage doors, and pitted the front and right exterior siding of the house. The adjuster writes the official insurance estimate, outlining what they intend to cover and for how much, which includes full roof and gutter replacement, however you are told the siding is not hailed damage but normal wear and tear and there is no mention of any damage to the garage door in her estimate. The RCV value of the roof is $14,000 & the gutter replacement is valued at $1500. The ACV is calculated to be at 30% depreciation so the initial insurance payment to you is ($15,500 x .7) $10,850. Your deductible is $2,000, so the actual check you receive in the mail with a breakdown of the items and trades covered is ($10,850 – $2,000) $8,850. There is ($15,500 x .3) $4650 in recoverable depreciation being held by your insurance carrier until the work is under contract or completed. You hire a General Contractor to oversee and manage the work to be done on your home. Your contractor explains how your siding does have hail damage and describes why including showing you collateral damage from the storm that supports the right scope of damage. Washable chalk is used to display dents from hail in the garage doors, and local estimates with appropriate documentation are forwarded to you or directly from your contractor for an insurance review. Insurance concedes that the new scope is supported with the provided detail, and agrees to pay for new garage doors ($2300) and new siding for the front and right side of the house ($18,000). The additional $20,300 is paid in full by insurance as the customer out of pocket deductible was already accounted for and satisfied with the original $8,850 insurance payment.
In this example, the total RCV for the roof ($14,000), gutters ($1,500), Garage Doors ($2300) & Siding ($18,000) = $35,800. The homeowner has paid $2,000 towards this total and collected $33,800 from insurance which includes both the ACV and the depreciated amount.