Insurance
Will Insurance Prorate Your Roof? Depreciation Explained
Yes, insurance companies can prorate a roof. "Prorating" means the insurer subtracts depreciation for the roof's age and wear from the cost to replace it. Whether you ever get that money back depends on one thing: does your policy pay replacement cost or actual cash value on your roof?
I get this question at a lot of kitchen tables after a storm. The adjuster's estimate shows one big number, then a smaller check. The difference is almost always depreciation and the deductible. Here is how it works.
What does it mean when insurance prorates a roof?
Depreciation is the loss in value from age, wear, and other factors (Insurance Information Institute). A 15-year-old roof is not worth what a new roof costs, so the insurer counts only part of the cost as its value today.
Ohio's claim rule spells out the math for actual cash value. The insurer takes the replacement cost at the time of loss, including sales tax, and subtracts depreciation (OAC 3901-1-54(I)(2)(a)).
Actual cash value (ACV) = replacement cost minus depreciation.
How is roof depreciation calculated?
Each insurer uses its own method. A common approach compares the roof's age to its expected life. Condition can matter too. The table below is only an illustration. It uses a $14,000 asphalt roof and an assumed 25-year life. Your insurer's numbers will be different.
| Roof age | Share depreciated (age ÷ 25) | Depreciation | ACV before deductible |
|---|---|---|---|
| 5 years | 20% | $2,800 | $11,200 |
| 10 years | 40% | $5,600 | $8,400 |
| 15 years | 60% | $8,400 | $5,600 |
| 20 years | 80% | $11,200 | $2,800 |
For context, a standard asphalt replacement on a typical Cincinnati home often runs $8,000 to $20,000. Pitch, layers, decking, and ventilation all move the price.
Do you get the depreciation back?
That depends on your loss settlement terms.
Replacement cost (RCV). The sample ISO homeowners form pays no more than actual cash value until the repair or replacement is done. Once the work is complete, it settles at replacement cost (sample HO-3, III). The money held back is often called "recoverable depreciation." Many policies set a time limit. The Ohio Department of Insurance gives 180 days from the date of loss as an example (ODI).
Actual cash value (ACV). The depreciation is not paid back. The ODI says an ACV policyholder "will likely not be fully compensated" for the cost to repair or replace (ODI).
Here is the 10-year-old roof from the table, with a $1,000 deductible:
| RCV policy | ACV policy | |
|---|---|---|
| Replacement cost | $14,000 | $14,000 |
| Depreciation | $5,600 | $5,600 |
| Deductible | $1,000 | $1,000 |
| First check | $7,400 | $7,400 |
| Paid after the work is done | $5,600 | $0 |
| Total from the insurer | $13,000 | $7,400 |
Some Ohio insurers now settle older roofs at ACV. I covered that shift in Ohio roof insurance: roof age, ACV, and matching rules, so I won't repeat it here. Check your declarations page to see which way your roof is settled.
How do I ask for the depreciation math?
You have a right to see it. Under Ohio's claim rule, when a loss is settled on an ACV basis, the insurer must give you documentation of all depreciation deductions if you ask (OAC 3901-1-54(I)(2)(a)). Ask in writing and keep a copy.
When you get it, check these items:
- The roof age they used. Is it right? A receipt, permit, or old inspection report can prove when the roof went on.
- The expected life they used. Ask what it is based on.
- What was depreciated. Some estimates depreciate labor as well as materials. Ask how yours was figured.
- Recoverable or not. Ask which part of the depreciation you can recover after the work is done, and by what date.
- The deductible. Make sure the right one was applied. Many Ohio policies have a separate wind and hail deductible.
What is "betterment"?
Sometimes an insurer says the repair leaves you better off than before and asks you to pay part of it. That is called betterment. If your policy settles on replacement cost, Ohio's rule says the insurer must keep documentation of how it figured the betterment charge. It must also document your agreement to that charge before you take on the repair cost (OAC 3901-1-54(I)(1)(c)). Do not agree to a betterment charge you do not understand.
How often will insurance pay for a new roof?
The sample HO-3 form does not set a number of roofs per years. Each claim turns on new damage from a covered cause, such as wind or hail. The form excludes "wear and tear, marring, deterioration" (sample HO-3, III).
Two practical points from my side of the table. If you took a check for an earlier roof claim and did not fix the roof, expect questions about that old damage on the next claim. And your insurer can change terms at renewal. The ODI suggests asking your agent whether your roof's age could affect renewal (ODI).
What if I disagree with the depreciation?
Start with the documentation. If the age or condition is wrong, send proof and ask for a corrected estimate. If the adjuster missed damage, ask for a reinspection. Our guide to filing a storm damage claim in Ohio covers reinspections, supplements, and appraisal.
How Shamrock can help
When we inspect your roof, we photograph the damage and note what we can see about its age and condition. We write a repair scope you can compare line by line with the adjuster's estimate, and we can meet the adjuster at the house. Your insurer decides what it pays. Request a free roof inspection or see our roofing services. If you face a gap, we also offer financing options.
FAQ
Is prorating the same as depreciation? Yes. Homeowners use "prorate" to describe the same thing. The insurer reduces the payment based on how much of the roof's life has been used.
Does a replacement cost policy depreciate my roof? Often it does at first. The first check is usually the actual cash value. The held-back depreciation is paid after the work is finished, if your policy allows it and you meet its time limit.
Can I keep the first check and not replace the roof? On an RCV policy, you generally get only the actual cash value if you do not repair or replace (sample HO-3, III). If you have a mortgage, the check may also list your lender.
Why is my 20-year-old roof worth so little on paper? Depreciation grows with age. Near the end of its expected life, a roof has little actual cash value left, even if it still keeps the water out.