Claim inquiry received. Before taking over the task, there are a few things that need attention, and all trade people know it. Let’s start with the first task: after confirming damage as a PA, my job is to confirm the coverage within the policy. Checking the deductible, policy limits, and then—as titled above—the loss settlement basis (RCV or ACV).

And woops, here we go: ACV (Actual Cash Value)!

In layman’s terms, this means your depreciation is not recoverable! Sounds kinda innocent to a policyholder who never had it explained by their agent what it really means if something happens. But hey, they were happy to save a couple hundred bucks on the premium per year, so all is good.

BTW, no offense, but most agents are not explaining the policy to the homeowners. There is really no responsibility on them unless they deceive, lie, manipulate, or—my favorite—bad-mouth Public Adjusters or even the idea of opening a claim. Nevertheless, the happy client/policyholder goes home happy about getting a great deal, saving some money, and proud of themselves… until property damage happens.

Then we have a reality check. The poor insured finds out that his deductible is higher than he thought, and in addition to it, the burden of the difference between the real replacement cost and the ACV is coming from the exact same pocket as the deductible—the homeowner’s. In my humble opinion, a policy written as described is completely unfair to the policyholder, as this additional cost is being added on top of the deductible that the insured already agreed to participate in for loss recovery.

Let’s get to the bottom of it, because I can already hear the carrier side of the industry saying, “Oh, it’s only fair! Why should we have to pay for an old roof/floor, etc., the price of a brand new one?”

Surprisingly, even for me, that argument is not invalid. It actually makes a lot of sense, right? Your totaled 2002 Honda will not be replaced with a brand new one, right?

But the devil is in the details. It makes perfect sense and is logically acceptable to assume that it is only fair to replace an item with an item of the same kind, age, and condition. I get that. Agreed.

However, if it comes to property damage, things get a little bit more complicated. Let’s start with the practical aspect of the issue. Carriers, in most cases, do not participate in the repair process—except those who offer repair programs through their vendors, and when the insureds are naive enough to go for it, but that is a different story. Knowing that, the policyholder finds out that to be able to afford the repair/replacement, finding the used materials—such as roofing tiles, shingles, flooring, etc.—is completely on his/her shoulders. How those materials are found, and if they even can be, is not the insurer’s problem.

From my long experience as a GC and a roofer, except for roof tiles that might be found for small repairs (very limited supply), it is impossible to find them. They simply do not exist! In auto insurance, it is easy to find a car to replace—same make, model, same or similar mileage, condition, even color. Worst-case scenario, a car like that can be appraised and the money it’s worth paid to the insured so they can buy whatever they want. In property damage, it cannot be done. Subject/debate closed.

However, let’s dig deeper into it, just for fun. For the purpose of it, let’s assume that we were able to locate the exact needed used material with enough quantity to do the repair and/or replacement. The question is: will Florida law allow it?

And look, if we really want to get ridiculous, the material does exist if the carrier is crazy enough. We can literally 3D-scan your obsolete tile and custom-manufacture a batch of them on a commercial 3D printer. Of course, printing a few custom roof tiles would cost more than replacing the entire roof with premium modern materials, but hey—if the carrier wants to pay a $50,000 tech premium just to avoid a full replacement, the option is right there on the table!

Since we are already past the technical/practical as well as law issues, let’s bend over the second deductible—AKA the ACV introduced into some of the policies in our beautiful state of Florida by top carriers. Depreciation depends on the age of the item and might end up bigger than the deductible—even significantly bigger. Despite the fact that most carrier adjusters do not check the age and just use their own judgment “cuz I said so”—little digression, cannot stop myself:

Getting back to ACV, it is in reality a second, sometimes even bigger deductible hidden under policy language that is unfair to insureds. I see at least two options or ways that I suggest would be acceptable and should be regulated by the state: