From the Insurance Hotline
By: Insurance Hotline
Spring 2026 (Vol. 44, No. 1)
Insurance carriers are increasingly shifting to Actual Cash Value (ACV) or scheduled depreciation for roofs once they reach around 15 years of age. While this change frustrates many homeowners, it reflects a broader recalibration of risk, costs, and sustainability in the property insurance market.
At its core, the issue is simple: roofs wear out. Materials like asphalt shingles - still the most common roofing type in the United States - typically have a functional life of 15-25 years depending on climate, installation quality, and maintenance. By the time a roof crosses the 15-year threshold, insurers view it as being in the latter half of its life cycle. Covering it on a full replacement cost basis means the insurer could be paying for a brand-new roof to replace one that was already significantly depreciated.
Most common roofing types in the United States typically have a functional life of 15-25 years depending on climate, installation quality, and maintenance.
Historically, many policies provided replacement cost coverage, meaning the carrier would pay to replace damaged property with new materials of like kind and quality. Over time, however, this created what insurers see as a mismatch: customers effectively receiving a 'betterment' upgrade. For example, a 17-year-old roof damaged in a storm might be replaced entirely at the insurer's expense, even though the homeowner had already received most of the roof's useful life.
The shift to ACV corrects for this by factoring in depreciation. Instead of paying the full cost of a new roof, the insurer pays the current value of the existing roof at the time of loss. This aligns the payout more closely with the actual economic value of the asset and reduces the incentive to defer maintenance or replacement.
Another major driver is the dramatic increase in weather-related losses, particularly in states like Florida, Texas, and Colorado. More frequent and severe hailstorms, hurricanes, and convective storms have driven up claims frequency and severity. Combined with rising construction costs - Iabor shortages, supply chain issues, and inflation in materials - roof claims have become one of the largest cost centers for insurers.
There's also a behavioral component. Some carriers have observed what they describe as 'claims-driven roof replacement,' where minor damage leads to full roof claims, often encouraged by contractors. By introducing ACYV schedules or age-based depreciation, insurers aim to reduce opportunistic claims and stabilize loss ratios.
From an underwriting standpoint, this shift allows carriers to continue writing business in high-risk areas rather than withdrawing entirely. In many markets, especially coastal regions, the alterative to ACV isn't full replacement coverage - it's non-renewal or significantly higher premiums.
For homeowners, the implication is clear: the financial responsibility for an aging roof is shifting back to them. This makes proactive maintenance and timely replacement more important than ever. Some carriers still offer replacement cost options, but often with stricter eligibility requirements, inspections, or higher premiums.
Ultimately, the move toward ACV after 15 years reflects a balancing act. Insurers are trying to maintain affordability and availability of coverage while managing escalating risks. While not always popular, these changes are part of a broader effort to keep the property insurance system functioning in an increasingly volatile environment.