When a Claim Does Not Pay What You Expected:

Replacement Cost vs. Actual Cash Value

In Florida, the difference between replacement cost and actual cash value often shows up at the worst possible time, after a claim. Two policies can look nearly identical on paper yet respond very differently once damage occurs.

Replacement Cost vs. Actual Cash Value

Replacement Cost coverage pays what it costs to repair or replace damaged property with materials of like kind and quality, without deducting for depreciation

Actual Cash Value coverage pays replacement cost minus depreciation. Age, wear, and condition all reduce the claim payment. An aging property may receive a significantly reduced payout even if the damage is extensive.

Can the roof be insured differently than the dwelling?

Yes, and this is becoming increasingly common in Florida.

Many policies provide replacement cost on the dwelling while applying actual cash value to the roof once it reaches a certain age. This allows carriers to manage risk while keeping premiums more affordable, but it also changes how claims play out.

Homeowners often do not realize this distinction exists until a roof claim occurs.

Hurricane losses vs. other covered losses

In Florida, coverage can vary depending on the cause of loss. Some policies apply different settlement terms for Hurricane or named storm losses

It is not unusual to see a roof covered at replacement cost for a fire, but settled on an actual cash value basis for hurricane damage. Deductibles can also differ, with hurricane deductibles calculated as a percentage of the dwelling limit rather than a flat dollar amount.

The real risk is assumption

Most coverage disputes stem from assumptions, not exclusions. Homeowners assume:

• Replacement cost applies to everything
• The roof is treated the same as the rest of the house
• A covered loss is covered the same way regardless of cause

In Florida, none of those assumptions are safe.

Understanding how replacement cost and actual cash value apply across the dwelling, roof, and hurricane losses allows you to make informed tradeoffs between premium and risk.

The goal is not always the least expensive policy. It is a policy that behaves the way you expect when a claim occurs.