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Hail and Roof Insurance Claims in Colorado: Free Course

How a homeowner's policy pays for a roof

Before and during the claim · 1 study hours

Bottom line: A roof claim is usually paid in two steps: first the actual cash value (replacement cost minus depreciation) minus your deductible, then the held-back depreciation once the work is done, if your policy pays replacement cost.

Bottom line first. The check your insurer sends first is usually smaller than the cost of a new roof. That is normal. The gap is made of two things: your deductible (the part you pay) and depreciation (a deduction for the age and wear of the old roof). Depending on your policy, you may be able to get the depreciation back later. Read your policy; its wording controls.

Two ways a policy can value a roof

Replacement cost means the cost to replace the damaged roof with a new one of similar kind and quality, with no deduction for age. Actual cash value (ACV) means roughly what the old roof was worth in its worn condition: replacement cost minus depreciation. Some policies pay replacement cost on the whole house. Some pay replacement cost on the house but ACV only on the roof. Look at your declarations page (the summary page of the policy) and any roof endorsement (an add-on page that changes the terms). Insurers often write special roof rules after hail, so check yours.

What depreciation and the holdback mean

Depreciation is the loss in value from age and wear. A 15-year-old roof has used up part of its life. Insurers use their own methods to estimate it, so the number can differ from one insurer to another.

With a replacement-cost policy, the insurer commonly pays in two parts. First it pays ACV. The depreciation it keeps back is the holdback. You get it later, after you repair or replace and send proof, such as invoices. Colorado law has a name for this: "recoverable depreciation" is the difference between the cost to replace insured property and its actual cash value (C.R.S. 10-4-110.8(3)(h)).

If your policy pays only ACV on the roof, the holdback never comes. The depreciation is gone for good, and you cover it yourself.

The deductible

A deductible is the amount of a covered loss you pay yourself before insurance pays. It is taken from the payment, once. Some hail policies use a percentage deductible (such as a share of the insured value of the house) instead of a flat dollar number. Your declarations page says which one you have. Do not skip the deductible or let anyone promise to cover it. A contractor cannot pay or waive your deductible; lesson hr-04 explains.

What Colorado statute 10-4-110.8 says, and does not say

  • It defines recoverable depreciation as above (C.R.S. 10-4-110.8(3)(h)).
  • It requires a homeowner's insurer to give you a copy of your policy, including the declarations page and endorsements, within the deadline in C.R.S. 10-4-110.8(10). The clock starts when the insurer's registered agent receives your written request (HB25-1322 (2025), Colorado General Assembly).
  • It bars a policy from requiring you to sue the insurer sooner than the normal statute of limitations (the legal deadline for starting a lawsuit) allows (C.R.S. 10-4-110.8(12)).
  • It requires an insurer to follow the unfair-claim-practice rules in C.R.S. 10-3-1104(1)(h) (C.R.S. 10-4-110.8(4)).

Be careful about one point. The section also has a rule giving a policyholder at least 36 months to submit receipts for replacement cost, but that rule applies to total losses from a governor-declared wildfire disaster (C.R.S. 10-4-110.8(13)). It is not a general hail-claim deadline. The time you have to collect your holdback after hail comes from your own policy, so find the "time limit to claim replacement cost" wording and write the date in your claim log. The sources checked for this course did not give a general hail deadline.

Also under 10-3-1104(1)(h), a payment must come with a statement of the coverage under which it is paid (C.R.S. 10-3-1104(1)(h)(X)), and an insurer must promptly give a reasonable explanation of the policy basis for denying a claim or offering a compromise (C.R.S. 10-3-1104(1)(h)(XIV)). Those rules help you read the estimate and the payment letter, which is why you should ask for them in writing.

Example with real numbers

Jordan's roof is 15 years old. Its shingles are rated for about 25 years. The insurer's estimate to replace the roof is $18,000. The deductible is $2,000. The policy pays replacement cost. Here are the steps.

  1. Replacement cost: $18,000.
  2. Depreciation: 15 years used out of 25 years of life is 15 / 25 = 60%. 60% of $18,000 = $10,800. (This is one simple method; insurers use their own.)
  3. Actual cash value: $18,000 - $10,800 = $7,200.
  4. First payment: ACV minus deductible = $7,200 - $2,000 = $5,200.
  5. Holdback (recoverable depreciation): $10,800, paid after Jordan finishes the work and sends the invoices, if the real cost is at least $18,000.
  6. Total if everything is paid: $5,200 + $10,800 = $16,000. Jordan's out-of-pocket is the $2,000 deductible, which equals $18,000 - $16,000.

Now suppose Jordan's policy had paid only ACV on the roof. The total would be $5,200, and the roof still costs $18,000, so Jordan would pay $12,800 ($10,800 depreciation plus the $2,000 deductible). Same roof, same storm, very different result. That is why reading the roof wording matters.

Another case: if the actual invoice comes in lower than the estimate, say $16,000, the holdback is usually limited to the real cost. Jordan would receive up to $16,000 - $2,000 = $14,000 in total instead of $16,000, because replacement-cost policies pay what you actually spend, up to the limit.

Questions to ask your insurer

  • Is my roof paid at replacement cost or actual cash value?
  • What is my deductible, as a dollar figure, for this claim?
  • How much depreciation did you take, and how did you work it out?
  • What proof do I send to get the holdback, and by what date?

Ask for answers in writing and put them in your claim log. This course is general education, not legal or insurance advice.

Law cited

Key terms

Replacement cost
The cost to replace damaged property with new property of similar kind and quality, with no deduction for age.
Actual cash value (ACV)
Replacement cost minus depreciation: roughly what the worn property was worth.
Depreciation
A deduction for the age and wear of the old property.
Recoverable depreciation
By Colorado statute, the difference between the cost to replace the property and its actual cash value. You may get it back once the work is done.
Holdback
The depreciation the insurer keeps back from the first payment until you repair and send proof.
Deductible
The part of a covered loss you pay yourself before insurance pays.
Declarations page
The summary page of a policy listing coverages, limits and deductibles.
Endorsement
An add-on page that changes the policy, such as special roof or hail terms.
Statute of limitations
The legal deadline for starting a lawsuit.
Percentage deductible
A deductible set as a share of the insured value instead of a flat dollar amount.

Flashcards

Replacement cost vs ACV?

Replacement cost has no age deduction. ACV is replacement cost minus depreciation.

What is the holdback?

Depreciation the insurer keeps back until you finish the work and send proof.

How does Colorado define recoverable depreciation?

Cost to replace the property minus its actual cash value (C.R.S. 10-4-110.8(3)(h)).

First payment formula?

Replacement cost - depreciation - deductible.

Who pays the deductible?

You. It comes out of the payment once.

If the policy pays only ACV on the roof, do you get the holdback?

No. The depreciation is not paid.

What starts the clock for a policy copy?

A written request received by the insurer's registered agent (C.R.S. 10-4-110.8(10)).

Can a policy force you to sue sooner than the statute of limitations?

No (C.R.S. 10-4-110.8(12)).

Is the 36-month receipts rule a general hail deadline?

No. It applies to total losses from governor-declared wildfire disasters.

Where do you find your holdback time limit for hail?

In your own policy wording. Write the date in your claim log.

Quiz: 10 questions

Tap an answer. It shows right or wrong and opens the reason. Your score is saved in this browser and counts in the study app.

  1. A roof has a replacement cost of $20,000 and $12,000 of depreciation. What is its actual cash value?

    1. A $12,000
    2. B $20,000
    3. C $8,000
    4. D $32,000
    Show answer and why

    Answer: C. $8,000

    ACV = replacement cost - depreciation = $20,000 - $12,000 = $8,000. $12,000 is the depreciation, not the value.

    C.R.S. 10-4-110.8(3)(h)

  2. Which best describes recoverable depreciation under Colorado law?

    1. A The difference between replacement cost and actual cash value
    2. B The deductible on the roof
    3. C The insurer's profit on the claim
    4. D The contractor's fee
    Show answer and why

    Answer: A. The difference between replacement cost and actual cash value

    The statute defines it as the difference between the cost to replace insured property and its actual cash value. The deductible is separate.

    C.R.S. 10-4-110.8(3)(h)

  3. Replacement cost $15,000, depreciation $9,000, deductible $1,500. What is the first payment?

    1. A $15,000
    2. B $4,500
    3. C $7,500
    4. D $6,000
    Show answer and why

    Answer: B. $4,500

    ACV = $15,000 - $9,000 = $6,000. First payment = $6,000 - $1,500 = $4,500. $6,000 forgets the deductible.

    C.R.S. 10-4-110.8(3)(h)

  4. Which is NOT part of getting a holdback paid, in the usual two-step process?

    1. A Finishing the repair or replacement
    2. B Sending invoices or proof of the work
    3. C Following the time limit in your policy
    4. D Waiting for the insurer to pay it before any work is done
    Show answer and why

    Answer: D. Waiting for the insurer to pay it before any work is done

    The holdback is normally paid after the work and proof, not before. The other three are the usual steps.

    C.R.S. 10-4-110.8(3)(h)

  5. Jordan's roof costs $18,000 to replace, with $10,800 depreciation and a $2,000 deductible, and the policy pays only ACV on the roof. What does Jordan pay out of pocket?

    1. A $2,000
    2. B $10,800
    3. C $18,000
    4. D $12,800
    Show answer and why

    Answer: D. $12,800

    ACV = $18,000 - $10,800 = $7,200. Payment = $7,200 - $2,000 = $5,200. Jordan pays $18,000 - $5,200 = $12,800, not just the deductible.

    C.R.S. 10-4-110.8(3)(h)

  6. Which request starts a Colorado insurer's clock for giving you a copy of your policy?

    1. A A written request received by the insurer's registered agent
    2. B A text message to your roofer
    3. C Any spoken request to the adjuster
    4. D A request made after the claim is paid
    Show answer and why

    Answer: A. A written request received by the insurer's registered agent

    HB25-1322 (2025) requires the request to be written and received by the carrier's registered agent. The window begins when the agent receives it.

    C.R.S. 10-4-110.8(10)

  7. A policy says you must sue the insurer within 6 months or lose the right. What does Colorado law say?

    1. A The policy is always enforceable
    2. B A policy may not require suit sooner than the statute of limitations allows
    3. C You must sue within 30 days
    4. D Only a judge can read the policy
    Show answer and why

    Answer: B. A policy may not require suit sooner than the statute of limitations allows

    C.R.S. 10-4-110.8(12) bars requiring suit within a period shorter than the statute of limitations. The short clause does not control.

    C.R.S. 10-4-110.8(12)

  8. The 36-month receipts rule in C.R.S. 10-4-110.8(13) applies to which situation?

    1. A Any hail claim
    2. B Any claim over $10,000
    3. C Total losses from a governor-declared wildfire disaster
    4. D Only roof replacements
    Show answer and why

    Answer: C. Total losses from a governor-declared wildfire disaster

    Subsection (13) is limited to total loss from a declared wildfire disaster. Do not assume it is a general hail deadline.

    C.R.S. 10-4-110.8(13)

  9. Under 10-3-1104(1)(h), a claim payment should be accompanied by what?

    1. A A statement of the coverage under which it is paid
    2. B A contractor bid
    3. C A signed release
    4. D A waiver of your deductible
    Show answer and why

    Answer: A. A statement of the coverage under which it is paid

    Subparagraph (X) lists making payments without a statement of the coverage as an unfair claim practice. It says nothing about releases or waivers.

    C.R.S. 10-3-1104(1)(h)(X)

  10. A roof with replacement cost $12,000, 50% depreciation and a $1,000 deductible, policy pays replacement cost, work done at exactly $12,000. What is the total the insurer pays after the holdback?

    1. A $6,000
    2. B $5,000
    3. C $12,000
    4. D $11,000
    Show answer and why

    Answer: D. $11,000

    ACV = $12,000 - $6,000 = $6,000; first payment = $6,000 - $1,000 = $5,000. Holdback $6,000. Total = $5,000 + $6,000 = $11,000, which is $12,000 - $1,000.

    C.R.S. 10-4-110.8(3)(h)

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