Whether your policy pays actual cash value or replacement cost is the single biggest variable in what a hail claim costs you, and most people find out which one they have after the damage. Here is the difference, in the state’s own words.
Replacement cost pays what it costs to replace the roof. Actual cash value pays that minus depreciation for the roof’s age and condition — and on a twenty-year-old roof, depreciation is most of it. Many Minnesota carriers have been moving older roofs onto actual cash value. The time to find out which one you have is now, not after the hail.
The Minnesota Department of Commerce defines both in a single page, and the definitions are short enough to be worth reading exactly rather than paraphrased.
Replacement cost value pays what it costs to put the roof back. Actual cash value pays that figure minus depreciation — the value lost to age, wear and condition. On a roof that is most of the way through its life, depreciation is not a rounding error; it can be the majority of the claim.
Minnesota Department of Commerce: “Actual Cash Value (ACV) Pays the value of damaged property after depreciation is deducted. Replacement Cost Value (RCV) Pays the cost to repair or replace damaged property without depreciation. Depreciation The reduction in value caused by age, wear and tear, or condition.” Source: MN Dept. of Commerce, Before a Disaster: Your Insurance Checklist
Commerce works it through with a roof, and the arithmetic is the whole argument for reading your declarations page before a storm rather than after one. A $30,000 roof, a $3,000 deductible, a $20,000 cheque — and $13,000 the homeowner has to find.
That gap is not a dispute or a mistake. It is what the policy says it will do. The only way to know whether it applies to you is to look.
Minnesota Department of Commerce: “It’s going to cost $30,000 to replace my roof · My deductible is $3,000 · My insurer is going to send me a check for $20,000 · I’ve got to come up with $13,000 to make repairs — plus whatever I’ve been paying in premium every month to have the policy in the first place.” Source: MN Dept. of Commerce, Before a Disaster: Your Insurance Checklist
On a replacement cost policy, the carrier often pays in two parts. The first cheque is the actual cash value — the depreciated amount. The rest, the withheld depreciation, is paid once the work is actually done and documented.
That is normal, and it is not the carrier being difficult. But it has a practical consequence worth planning for: the first cheque will not cover the job, and a contractor asking for payment in full up front is asking for money the policy has not released yet.
It also means the paperwork matters. Depreciation is recovered by proving the work was completed to the scope. An itemised final invoice that matches the estimate is what releases it.
It is on your declarations page, usually under the dwelling coverage, and it may say something specific about the roof separately from the rest of the house. Some policies carry replacement cost on the structure but actual cash value on a roof over a certain age.
If it is not clear, ask your agent directly: “If my roof is destroyed by hail tomorrow, do you pay replacement cost or actual cash value, and does the roof’s age change that?” Put it in writing and keep the answer.
The Department of Commerce will also help you read your own policy. Their Consumer Service Center is 651-539-1600. They are not on anyone’s side and they do not sell anything.
Minnesota Department of Commerce, when to call: “You have questions about insurance coverage · You cannot reach your insurance company · You are unsure where to start · You need help understanding your policy. Consumer Service Center 651-539-1600” Source: MN Dept. of Commerce, Before a Disaster: Your Insurance Checklist
Often yes, but the arithmetic is different and it is worth doing before you file rather than after. If the depreciated payment is close to your deductible, a claim may cost you more in future premium than it returns.
What we can do is tell you what the roof actually needs and what it would cost, in writing, before you make that call. That is a free estimate and it does not oblige you to file anything.
This page quotes Minnesota statutes and the adopted Minnesota building code and links to the official text of each so you can read it yourself. It is general information from a licensed contractor, not legal advice, and it is not a substitute for reading your own policy. Statutes and codes are amended; the linked sources are authoritative, this page is not. Last reviewed 2026-10-27.
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