Do I have to spend the insurance money on the roof?

If there is a mortgage, the lender is usually named on the payment and has a direct interest in the repair being done. Beyond that, not doing the work forfeits recoverable depreciation and leaves a damaged roof the insurer has already paid for, which complicates any later claim on the same component.

Answers · Storms and insurance

What is the difference between ACV and replacement cost on a roof?

The short answer

Replacement cost pays what it costs to replace the roof today. Actual cash value pays that minus depreciation for the roof's age and condition, which on an older roof can be a large deduction. Many replacement cost policies pay the actual cash value first and release the depreciation once the work is done and invoiced.

How a recoverable depreciation payment usually works

The insurer approves the claim and issues a first payment: the replacement cost less depreciation, less your deductible.
You have the work done.
You submit the final invoice showing what was actually spent.
The insurer releases the withheld depreciation, up to the approved amount.

The consequence people miss is that the depreciation is only recoverable if the work is actually done and documented. Taking the first payment and not replacing the roof forfeits the rest, and it leaves you with a roof the insurer now considers settled.

Why supplements exist

An adjuster's initial scope is an estimate. When the roof comes off and the deck turns out to need replacing, or code requires something the estimate did not include, the contractor submits a supplement with documentation. This is normal and legitimate. It is also the mechanism some operators abuse, which is why the documentation matters.

Also asked

Do I have to spend the insurance money on the roof?: If there is a mortgage, the lender is usually named on the payment and has a direct interest in the repair being done. Beyond that, not doing the work forfeits recoverable depreciation and leaves a damaged roof the insurer has already paid for, which complicates any later claim on the same component.

General information about roofs and about hiring, not advice about your building. Roofing contractor licensing, permits, insurance practice and deductible rules are set state by state and province by province across the United States and Canada, so your own authority is the current answer.