Actual Cash Value vs. Replacement Cost: What DFW Homeowners Need to Know About Roof Coverage

DFW homeowners: Learn the difference between actual cash value and replacement cost—and how it affects your roof coverage and home insurance claim.

If you’re a homeowner in Dallas-Fort Worth and reviewing your home insurance policy, you may have seen terms like “actual cash value” (ACV) and “replacement cost value” (RCV). But what do they really mean—and which one should you have on your policy?

Even more importantly: many Texas insurance carriers are shifting to ACV-only policies for roof coverage, which can leave homeowners with far less than they expected after a hailstorm.

Let’s break it all down and explain how it applies to homes in Mansfield, Fort Worth, and the greater DFW area.

What’s the Difference Between ACV and RCV?

Replacement Cost Value (RCV)

RCV is the cost to replace or repair your damaged property without deducting for depreciation.

• If your roof is damaged in a storm, RCV will cover the full cost to replace it with similar materials.
• You’ll typically receive two payments: the ACV portion first, then the remaining RCV once repairs are complete.

Actual Cash Value (ACV)

ACV is the replacement cost minus depreciation.

• If your 15-year-old roof is damaged, you might only receive a fraction of the cost to replace it—because the insurer deducts for wear and age.
• You’ll pay significantly more out of pocket to complete repairs.

Why It Matters for Roof Coverage in DFW

North Texas is in the heart of “Hail Alley”. DFW experiences frequent hailstorms, high winds, and storm-related damage—especially between March and June. Roof claims are the most common type of home insurance claim in the region.

Because of this, many insurance companies have started changing how they cover roofs, particularly older ones.

Here’s what we’re seeing in the market:

• Older roofs (10–15+ years) are often only covered on an ACV basis.
• Some carriers exclude wind and hail coverage completely unless the roof is upgraded.
• Roof material type (composition, tile, metal) also affects how it’s valued.

This shift is a cost-control move by insurers—but it can be a costly surprise to homeowners who thought they had full coverage.

Example: ACV vs RCV in Action

Let’s say you have a roof that’s 15 years old and it’s damaged in a DFW hailstorm.

• Replacement Cost Value: $20,000
• Depreciation (50%): -$10,000
• Deductible: $3,000

With RCV coverage:

• You receive $17,000 (RCV – deductible)

With ACV coverage:

• You receive $7,000 (ACV – deductible)

That’s a $10,000 difference out of your own pocket.

How to Tell What You Have

Check the “Loss Settlement” section of your homeowners insurance policy. It will tell you whether your dwelling and roof are covered under ACV or RCV.

Still not sure? Contact your agent—or let us at McKnight Insurance review it for you.

Which One Is Better?

In most cases, replacement cost coverage is better—because it pays what you actually need to repair or rebuild.

ACV can leave homeowners underinsured, especially in DFW where:

• Hail damage is common
• Roof replacements are expensive
• Roofs age quickly due to heat and UV exposure

However, some insurers may only offer ACV for older roofs—or offer RCV at a higher premium.

Can You Upgrade to RCV?

Yes—many carriers offer a roof endorsement or upgrade to replacement cost coverage if your roof qualifies (usually newer or recently replaced). Some may require proof of roof age or condition.

If you’re planning to replace your roof, talk to us about coverage options before the work begins. We may be able to improve your policy at that time.

Tips for DFW Homeowners

• Know your roof’s age and material type

• Ask your agent what kind of coverage you have (don’t assume)
• Review your deductible—many DFW policies have separate wind/hail deductibles
• Consider impact-resistant shingles (may qualify for discounts)
• Get a roof inspection every few years, even if no damage is obvious

How McKnight Insurance Helps

At McKnight Insurance Services, we specialize in helping homeowners across Dallas-Fort Worth:

• Understand their policy details
• Compare RCV and ACV options
• Find carriers that still offer full replacement cost for newer roofs
• Avoid unpleasant surprises at claim time

Are you frustrated with your insurance—or unsure what’s actually covered? Contact McKnight Insurance today. We’ll review your policy and help you make sure your roof—and your home—are properly protected.

Don’t wait for a storm to find out you’re underinsured. Let’s get ahead of it.