Xactimate, RCV, ACV, Depreciation: Your Roof Claim Estimate Decoded

The roof insurance estimate your adjuster sends you is usually 8 to 20 pages of line items produced by a piece of software called Xactimate. If you have never seen one before, the terminology can feel deliberately opaque. It is not. Every line means something specific, and the math is straightforward once you know what the columns represent.

Here is the plain-English decoder for the estimate you are looking at right now.

What Xactimate Is (and Why It Matters)

Xactimate is the estimating software used by the vast majority of property insurance adjusters in North America, as well as most contractors who work insurance claims. It has a database of construction line items with unit costs that are updated quarterly by ZIP code. When an adjuster writes your claim, they are selecting line items from this database and multiplying by measured quantities.

The reason this matters: because both sides typically use the same software and the same price lists, supplements and negotiations are not about opinion. They are about whether a specific line item was included in the estimate or not, and whether the quantity is correct. A supplement is almost always a conversation about what was missed, not about whether the pricing is too low in general.

RCV: Replacement Cost Value

Replacement Cost Value is what it costs today to replace the damaged property with materials of like kind and quality. On your estimate this is the gross line total before any deductions.

Example: if your roof needs replacement and the installed cost of shingles, underlayment, flashing, labor, disposal, and permits totals $22,500, that $22,500 is the RCV.

ACV: Actual Cash Value

Actual Cash Value is the RCV minus depreciation. Depreciation reflects the age and condition of the damaged property at the time of loss. A 12-year-old 30-year shingle has depreciated roughly 40 percent of its useful life, so the ACV is RCV minus that depreciation.

Continuing the example: $22,500 RCV minus 40 percent depreciation = $13,500 ACV.

Recoverable vs. Non-Recoverable Depreciation

This is the most commonly misunderstood part of a claim. Almost all modern homeowner policies in Colorado, Kansas, Missouri, Nebraska, and Wyoming pay on a Replacement Cost basis, which means:

• First, the carrier pays you ACV minus your deductible to get the work started.
• Once the work is complete and the final invoice is submitted, the carrier pays the recoverable depreciation (the difference between ACV and RCV).

Continuing the example:

• RCV: $22,500
• ACV: $13,500
• Deductible: $2,000
• First check (ACV minus deductible): $11,500
• Second check (recoverable depreciation) upon invoice: $9,000
• Total paid by carrier: $20,500
• Homeowner out-of-pocket: $2,000 (just the deductible)

Some policies, usually older or lower-tier ones, pay ACV only and the depreciation is non-recoverable. You would pay the depreciated amount out of pocket. Read your declarations page carefully — this distinction is usually in bold on page 1.

Overhead and Profit (O&P)

When a claim is complex enough to require a general contractor to coordinate (typically defined as three or more trades), carriers add 10 percent for overhead and 10 percent for profit, called the "10 and 10" or O&P line. This is a line item on your estimate.

Most full roof replacements on Colorado homes qualify for O&P because they involve roofing, gutters, and exterior paint or siding at minimum. If your estimate lacks O&P and involves three or more trades, that is usually recoverable in a supplement.

Sales Tax

Xactimate calculates material sales tax automatically by line item. In Colorado, this runs roughly 2.9 to 8 percent depending on the municipality. If your estimate shows material amounts without tax, or applies tax at a Denver rate when your home is in unincorporated Adams County, that is a correctable line item.

Deductible

Your deductible is the out-of-pocket amount you owe before insurance pays. In Colorado, wind/hail deductibles are usually a percentage of the dwelling coverage rather than a flat dollar amount. A 1 percent deductible on a $400,000 home is $4,000, not $1,000. Colorado started seeing 2 and 3 percent wind/hail deductibles from some carriers after 2020 — the jump from 1 to 2 percent doubles your out-of-pocket on every claim.

A contractor who "waives your deductible" is committing insurance fraud in Colorado, Kansas, Missouri, Nebraska, and Wyoming, and you become an accessory. Do not sign with anyone who offers this.

Code Upgrade Allowance

Most modern policies include a small allowance (typically $5,000 to $10,000) for code upgrades required by local building inspectors at re-roof time. In Colorado that commonly means drip edge (required statewide), ice-and-water shield in valleys and at eaves (required in some jurisdictions), synthetic underlayment, and upgraded ventilation. These line items should appear on your estimate. If they do not, they are a supplement.

Price List Version

Xactimate price lists are updated quarterly. A storm in May inspected in June should be priced on the current quarter's price list for your ZIP. If your estimate is using a price list from two years ago, or for a different ZIP, every unit cost is wrong. The price list version is in the estimate's header — always check that it is current and ZIP-matched.

Supplements: The Normal Process

We have never seen an initial adjuster estimate that covers everything a re-roof actually requires. The typical gap between the first estimate and the final approved scope is 15 to 40 percent. That is not a claim of adjuster incompetence; it is how the process is designed. The initial estimate covers what the adjuster can see and document in 45 minutes. The supplement captures everything that gets discovered during tear-off: rotten decking, missing ice-and-water shield, buried code violations, code changes since the last roof, and interior damage that was not caught on the first walk.

Expect your final settlement to be meaningfully higher than the first number. If your contractor is not filing supplements, you are leaving money on the table.

Related Reading

• Understanding Your Roof Insurance Claim
• What Your Insurance Adjuster Is Actually Looking For
• Our storm-damage insurance claim services