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# Blog # roof insurance claim process – questions ### How to calculate Actual Cash Value and Recoverable Depreciation

Actual Cash Value example and formula  Let’s say you put a new \$10,000 roof on your house 5 years ago and your roof was just destroyed by a hail storm. Let’s also assume your 5 year old roof was average asphalt roofing shingles, which lasts about 20 years. Because your roof was only 5 years old when the hail storm hit, the Actual Cash Value would be \$7,500. Accordingly, the recoverable depreciation would be \$2,500. This is the difference between the \$10,000 replacement cost and the actual cash value.

Here’s the formula:

R x (E – C) / E = ACV

10,000 x (20 – 5) / 20 = 7,500

R = \$10,000 (Replacement cost or purchase price of the roof)
E = 20 years (Expected life of the roof)
C = 5 years (Current life of the roof)

Actual Cash Value is calculated by subtracting the current age of your roof from the expected life of the roof (e.g. 20 – 5, which = 15), times the replacement cost or purchase price of the roof (15 x \$10,000, which = 150,000), divided by the expected life of the roof (150,000 / 20, which = 7,500.