The Sixth Circuit has ruled that a homeowner cannot reasonably interpret an ACV endorsement to his policy as creating additional coverage for damage to his roof from a windstorm. The case is Richelson v. Liberty Ins. Corp., No. 19-3035, 2020 U.S. App. LEXIS 862 (6th Cir. Jan. 6, 2020).

A windstorm caused damage to the roof of Murray Richelson's home. Richelson filed a claim with his homeowner's insurer Liberty Insurance (Liberty). An adjuster determined that the cost to replace the roof would be $8,960, but Liberty declined to pay the replacement cost, instead, paying the amount of the actual cash value, or ACV, of the roof. Liberty determined the ACV by applying the $1,000 deductible listed in the policy, and also deducting depreciation from the replacement cost amount. So, Liberty reimbursed Richelson $4,350.50, which equates to less than half the replacement value of the roof, leading to a dispute about the terms of the policy.

Section 1 of the policy addressed "A. Dwelling with Expanded Replacement Cost", where it states that "[l]osses covered under Section 1 are subject to a deductible of $1,000." Policies include endorsements, which amend the insurance contract and impact the scope of coverage in some way. In the Richelson's policy, there was an endorsement that said in large upper-case font "THIS ENDORSEMENT CHANGES YOUR POLICY. PLEASE READ IT CAREFULLY."  Below that warning, the endorsement states that losses to "[b]uildings under coverage A or B, except for their roof surfacing, roof vents and roof flashing materials if the loss to the roof surfacing, roof vents, and roof flashing materials is caused by the peril of Windstorm or Hail, [is] at replacement cost without deduction for depreciation. . . ." The endorsement also provides the coverage that applies in those situations. Claims for losses to "[r]oof surfacing, roof vents and roof flashing materials if the loss is caused by the peril of Windstorm or Hail" are settled at "actual cash value at the time of the loss but not more than the amount required to repair or replace."