What is recoverable depreciation?

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Recoverable depreciation is the difference between the cost to replace or repair property and its value before the damage occurred. Recoverable depreciation is the maximum amount of money you can recover from your homeowners insurance company after you have some repair or replacement work on you home. Items that your recoverable depreciation insurer considers recoverable and non-recoverable must be mentioned in the loss settlement provision of your homeowners policy.

Recoverable depreciation can be an important part of your homeowners insurance policy, especially if you need extra money. Homeowners insurance has 2 specific clauses that you may include in your policy. One clause concerns recoverable depreciation.

How can you claim recoverable depreciation?

Here are a few simple steps you may follow in order to make your recoverable depreciation insurance claim:
  • Review the policy: A claim for recoverable depreciation cannot be made on the actual cash value (ACV). Look at your policy carefully, and look for the recoverable depreciation clause.
  • Gather evidence: Your insurance company will require evidence that you repaired your home or replaced the property before they will allow a recoverable depreciation claim. The adjuster will need documents that will help him confirm the value of the house after the damage has occurred.
  • Contact the insurance agency: Once you've contacted the insurance company, either online or over the phone, the adjuster will do an appraisal of your home in order to estimate the amount of damage they will compensate you for.
  • Depreciation check: Once the insurance company has allowed your claim, they will send you a check. The amount of the check should be the sum of your assets and depreciation minus the deductibles. The check may be made out to you, your mortgage lender, or both of you depending on the value of the check. If it is made out to you and your lender the check must be endorsed by the bank, which will deposit your share into your account.
You can be given recoverable depreciation on claims when you fill out certain paperwork and submit to the insurance company. However, you must remember that any non-recoverable depreciation cannot be converted into recoverable depreciation. So, when you buy a policy you must check the documents clearly to find out which items are recorded under the category of recoverable depreciation.

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PostPosted: Thu Apr 16, 2009 2:36 am   Post subject: What is recoverable depreciation?  

I have a claim that includes some other cosmetic work. To give an example.

My recoverable depreciation is 1K, My deductible is 2.8K. Total settlement is 13.9K. I don't have any mortgage on the house. The first insurance check settlement amount - deductible - recoverable dep = 10.1K. Now my question is if I decide to get the necessary repairs within the 10.1K amount, do I have to still care about recoverable depreciation? I am willing to forgo the recoverable depreciation by trying to fix everything using the first check. Do I still need to submit the work receipts to insurance company if I don't care about getting the recoverable expense? Can the claim close once the timeline to file for recoverable depreciation lapses (usually 180 days).

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PostPosted: Thu Apr 16, 2009 10:41 am   Post subject:   

If I know it correctly then the term recoverable depreciation defines the portion of the claim amount that the insurance company would release only after being satisfied that this amount is required for the repair works. Now, if you would like to let it go and can fix the damages within the claim check, you can't actually show proof to the insurance company that this money is required towards repairs. So, no question of receiving the recoverable depreciation arises.

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PostPosted: Thu Apr 16, 2009 10:58 am   Post subject:   

Normally, people try to recover the entire amount they are entitled for the claim even when the repair costs are much less than the actual evaluation. Therefore, the insurers have implemented the idea of recoverable depreciation to avoid losses towards claims. Now, if you don't want it, don't pursue the claim.


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PostPosted: Thu Apr 16, 2009 12:24 pm   Post subject:   

Quote:
I am willing to forgo the recoverable depreciation by trying to fix everything using the first check. Do I still need to submit the work receipts to insurance company if I don't care about getting the recoverable expense?
no, if you are willing to let it go, your carrier will too...keep the receipts for your own records (atleast a year)...but no need to worry about your carrier


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PostPosted: Thu Apr 16, 2009 11:22 pm   Post subject: Replacement cost- ACV=Recoverable depreciation  

Under homeowner insurance contracts, the insurer is only required to pay the full replacement cost once repairs are actually completed. They will (at times) only pay the Actual Cash Value (ACV) of a property loss, which is a fancy term for the depreciated value, which more accurately put would be "replacement cost - depreciation = ACV."



Insurers have language within the contract that allows the policyholder to make claim for the depreciated portions of the loss only if the actual repairs are made, normally within 180 days of initial loss settlement. This is what they term as recoverable depreciation. As an example:



Your house was damaged, and the replacement estimate is $5,000 to fully replace the damaged area with materials of like kind and quality. However, the damage (due to age) was, say, 20% and the insured has a $500 deductible. Here's the math: $5,000 - $500 (deductible) = $4500 - 20% depreciation = $3600 which would be payable to the insured initially.



Notice that $900 was subtracted from the loss settlement due to the depreciation. The insured will now normally have 180 days to actually make the repairs and then claim the $900 that was subtracted from the initial loss settlement. If the insured gets the repairs completed within the initial loss settlement check, he won't get anything back on the "depreciated amount" subtracted. Keep in mind that the $900 is the maximum the insured would get back once repairs have been completed. If the insured can get the work done for less, that's all that will be compensated by the carrier.



Does this help?



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PostPosted: Fri Jul 24, 2009 3:44 am   Post subject: Recoverable depration  

I sent my insurance a check where I paid the contractor and a final. Invoice from contractor and now they want to see the canceld check front and back. But the check did not run threw because the contractor made us right so he would have it on file. I need the rest of depration to pay them off what should I do?


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PostPosted: Fri Jul 24, 2009 6:22 am   Post subject:   

What does the contractor have to say regarding the check?

Did he deny possessing it on his file?


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PostPosted: Fri Jul 24, 2009 11:15 am   Post subject:   

Quote:
I sent my insurance a check where I paid the contractor and a final. Invoice from contractor and now they want to see the canceld check front and back.
Who wants to see this?
Quote:
But the check did not run threw because the contractor made us right so he would have it on file.
What? Then no one has actually been paid...
Quote:
I need the rest of depration to pay them off what should I do?
You can't get paid for the depreciation until you can PROVE that you have replaced (or repaired) whatever it was you were paid for...Darby this post makes no sense...in order to help you we need for you to answer the following questions:



> when did this loss occur?

> what are the facts of loss?

> what state are you in?

> when were you paid and how much?

> who have you paid, how did you pay, how much

did you pay, and how much do you still owe?

> when were you paid by the carrier?


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PostPosted: Sat Jul 25, 2009 4:57 am   Post subject:   

Quote:
But the check did not run threw because the contractor made us right so he would have it on file.




It sounds as if your contractor needs to cash the check and you need a oopy of the front and back. Was your contractor holding this because you did not have enough in your account to cover it?


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PostPosted: Wed Aug 05, 2009 8:31 pm   Post subject: claim money  

My insurance company paid a claim to repair my roof for hail damage. Do I have to fix the roof with the money i got?


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PostPosted: Wed Aug 05, 2009 11:20 pm   Post subject:   

Quote:
My insurance company paid a claim to repair my roof for hail damage. Do I have to fix the roof with the money i got?
nope..who did they issue payment to? Just you? or you AND your mortagee or you AND a roofing contractor?


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PostPosted: Sun Oct 25, 2009 9:11 pm   Post subject: Depreciation  

Now keep in mind that you cannot "make money" on an insurance claim. Any amount less than the RCV will be subtracted from the depreciation payment. Let's say the RVC for your damages was 10K and you have a 2k deductible and 3k in depreciation. Now you have your repairs completed for 8k, and your contractor sends in a Certificate of Completion or a final invoice to your insurance company. You will only receive 1k of your depreciation back because the RCV has become 8K.

Say what they will "depreciation" is a checks and balances system used to ensure that the insured is paying there deductible. One more thing, Don't let your contractor send in false invoices that is "Insurance fraud" and in most states is a class 3 felony. Sad

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PostPosted: Sun Nov 01, 2009 6:15 am   Post subject: rcv depreciation  

in most cases,you dont need to spend ALL the money to recover the holdback. if more time is needed,it should not be a problem.

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PostPosted: Mon Nov 02, 2009 9:37 pm   Post subject: RCV Depreciation  

That is not a correct statement, the insured has to spend the total amount of the loss to recover 100% of the recoverable depreciation. The reason being if the insured is payed 10k for the loss, but has the work done for 8k the RCV now becomes 8K. You are correct that if more damage is found the insurance company may pay for it. If you find that the RCV is 20% higher than what the insurance company paid you might have a problem then.


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PostPosted: Fri Nov 06, 2009 4:03 pm   Post subject: home claim  

who gets the check for less recoverable damages?


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