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Tips for selecting a contractor:

1. Be aware that many restoration contractors will ask you to sign an agreement. It is important to
thoroughly read the contract or agreement before signing.

2. Ask your contractor for references that you can call or stop by to see their work.

3. Ask your contractor to provide you with a copy of their license, solicitors permit, liability insurance &
worker’s compensation insurance certificate.

4. Ask your contractor for a copy of their warranty and information whether repairs are serviced locally or
from a national office.

5. Check for a local office, verify telephone numbers and where applicable ask for a copy of their
business license.

6. Check to see if the contractor is a member of any regional or national industry associations, such
as NRCA.

7. Have the contractor explain his project supervision and quality control procedures. Request the
name of the person who will be in charge, how many workers will be required and the estimated
time of completion.

There are two methods of compensating you to bring you to a “pre-loss condition.” One is to pay you
Replacement Cost Value (RCV) and the second is to pay you Actual Cash Value (ACV). What’s the
difference between the two? Depreciation.

RCV
Payment based on the replacement cost of damaged or stolen property is usually the most favorable
figure from your point of view, because it compensates you for the actual cost of replacing property.
If your camera is stolen, a replacement cost policy will reimburse you the full cost of replacing it with
a new camera of like kind. The insurer will not take into consideration the fact that you ran three rolls
of film through the camera every day for the last two years, causing a considerable amount of wear
and tear.

ACV
In contrast, actual cash value (ACV), also known as market value, is the standard that insurance
companies arguably prefer when reimbursing policyholders for their losses. Actual cash value is
equal to the replacement cost minus any depreciation (ACV = replacement cost – depreciation). It
represents the dollar amount you could expect to receive for the item if you sold it in the marketplace.
he insurance company determines the depreciation based on a combination of objective criteria
(using a formula that takes into account the category and age of the property) and subjective
assessment (the insurance adjuster’s visual observations of the property or a photograph of it). In the
case of the stolen camera, the insurance company would deduct from its replacement cost an amount
for all the wear and tear it endured prior to the time it was stolen.

When your adjuster comes out to settle your claim, they will prepare an estimate of damages, then
deduct your deductible and deduct the value of depreciation. Depreciation value is often determined
by the Property Loss Research Bureau – a third party organization that performs all research related
to insurance claims and loss. Typically insurance companies follow their standards.

Here’s where the important part comes in. If you have an ACV policy, you get your check and
that’s it. Once depreciation is deducted and you get the actual cash value, the claim is settled.
You have to come up with the actual amount to do repairs on the property and replace contents.
However, if you have an RCV policy – you’re in a much stronger position. In an RCV policy, you typically
get your actual cash value check when the adjuster first comes out….then you get another check that
covers the difference between ACV and RCV after your contractor completes repairs on the property.

No Code Upgrade Policies
Some policies will provide either ACV or RCV coverage, but exclude items that are 1) not already existing
and 2) required under current building codes. For example, ice and water and drip edge are required in some
municipalities in the state of Colorado. However, if these items are not currently on the roof and the homeowner
has a “no code upgrade policy,” the homeowner is responsible for these costs.

**Some of the information provided is the property of © Insurance Information Institute, Inc. –
ALL RIGHTS RESERVED

Complete Roof has been helping property owners restore and improve
their asset throughout Illinois and Wisconsin for the past 10 years.
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