What is recoverable depreciation?

by info_2 » Thu Apr 16, 2009 02:36 am
Posts: 1
Joined: 16 Apr 2009

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.

Related readings

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).

Total Comments: 90

Posted: Thu Sep 04, 2014 09:20 pm Post Subject: ACV Coverage and Recoverable Dep

Thanks for addressing my question. Our cedar shake roof coverage had been downgraded to ACV due to age. (interestingly, another policy holder was grandfathered the RCV coverage.) We received a settlement resulting from hail damage. We think we can get a proper roof for less than the ACV amount paid out to us. The settlement for the roof included recoverable depreciation for skylights. Can we recover that depreciation if we submit receipts for the new skylights or will the insurer require us to prove we paid the entire ACV amount allocated for the new roof ?

Posted: Mon Sep 08, 2014 03:31 pm Post Subject:


(interestingly, another policy holder was grandfathered the RCV coverage.)

How do you know this? If you were discriminated against in some fashion, you may have a case against the insurance company for bad faith.

Did the insurance company specify amounts for the skylights as separate cost items? If so, you only need to provide receipts for the actual cost to replace those items (labor & materials). The rest of the roof would be a separate issue.

Posted: Sat Feb 21, 2015 07:33 pm Post Subject: Time line for recoverable depreciation

We have been fighting our insurance company for almost a year on our claim.. We wen through the appraisal process and finally settle on the structure part. Now they are telling us that we have to be done with our house in two months to recover the depreciation. There is no way that this will happen and with all our bids we know we will need that to complete the construction. Is there anyway to get more time since the year our policy states was all chewed up by this fight? Thanks for any comments

Posted: Sun Feb 22, 2015 08:04 am Post Subject:

You don't mention the kind of damage you have claimed.

When EXACTLY did you finalize the settlement amount on your structural damage claim?

Normally, repairs must be completed with 180 days of loss to obtain the recoverable depreciation amount. A building contractor will often contract to complete the work using the initial funds provided by the insurance company, knowing that he will receive the balance once the work is complete.

However, if the insurance company has been stringing you along, you should be given the additional time to complete repairs. If they refuse, you could have the basis for a great BAD FAITH case against the insurance company.

You need to talk to a Claims Dept Manager -- NOT the claims adjuster you have been dealing with all along, and request the time needed to complete repairs.

Posted: Thu Sep 17, 2015 01:31 pm Post Subject: water damage

Our insurance co gave us a check for $15,000, but allowed for $19,000 with recoverable depreciation. What is required to retrieve the remaining money?

Posted: Mon Oct 19, 2015 06:05 pm Post Subject: deprecetaion check

example if I had a clain for 10000 less deductible 1000 = 9000
insurance issued check for 6000 held back 3000 now work is completed I showed invoice for 6000 is that acceptable or do I need work to total 9000?

Posted: Tue Oct 20, 2015 02:04 am Post Subject: insurance house

example if I had a clain for 10000 less deductible 1000 = 9000

insurance issued check for 6000 held back 3000 now work is completed I showed invoice for 6000 is that acceptable or do I need work to total 9000?

Posted: Fri Jan 20, 2017 12:07 am Post Subject:

Do I have to use money issued for a new roof to repair the roof?

Posted: Fri Jan 20, 2017 12:53 am Post Subject: Claim

The insurance co.has already given us a check for our claim and we are happy with it. Why do they want receipts now? (replacement receipts for the recovery of the depreciation portion of your claim)

Posted: Fri Jan 27, 2017 11:17 pm Post Subject: recoverable depreciation

I had a fire in my house that it also damaged the pavers, electrical and pool in the backyard. I repaired the pavers, electrical and pool and I paid out of pocket for the work. I have been waiting for money and my adjuster told me that I have depreciation but it is not recoverable. What does this mean. I am not going to get money for the work.

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