By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division

According to the U.S. Department of Energy, the average roof replacement cost is $10,000.  Understanding the coverage for your roof on your homeowners insurance can be the knowledge that ensures your home and your finances remain secure in the face of Iowa weather.  

The roof on your home is covered by homeowners insurance under the dwelling or Coverage A portion of the policy.  Coverage A will pay for the cost to repair or replace your home up to the policy limits if damaged by a covered peril such as wind, hail, or fire. Roof repairs may fall under two categories: actual cash value or replacement cost. 

Actual cash value means the insurance carrier will pay for the roof’s depreciated value based on the age and condition of the roof before the damage.  For example, if the roof is ten years old the insurer will deduct depreciation for each year.  The homeowner will be responsible for paying the remaining cost to replace the roof, plus the deductible.  Actual cash value coverage for your roof is less expensive than replacement cost, but a claim payment will not replace the roof. 

Roof replacement cost coverage under your homeowners policy will pay to repair or replace the roof with materials of similar quality, the cost of labor, permits, and inspections are included, less the policy’s deductible.   

When determining which coverage is best for your situation, remember that roof replacement costs may include the type of materials used, the size and complexity of your roof, and the removal and disposal of the existing roof.  For both actual cash value and replacement cost, there may be exclusions for certain types of damage, such as wear and tear, or a limit on the amount of coverage.  

Many homeowners policies now include an endorsement, or rider, specifically related to how settlement for a damaged roof will be addressed.  This endorsement may replace replacement cost coverage with actual cash value.  It may also denote a specific amount of depreciation  based on the age and type of roofing material. 

Know the coverage on your homeowners policy and specifically the protections for your home’s roof.  Work with your licensed insurance agent to ensure the coverage meets your financial needs.