Recoverable Depreciation: The Money You Haven't Been Paid Yet
Your settlement arrived and it's less than the estimate. Somewhere in the paperwork is a line for depreciation, and a figure has been taken off.
That money isn't gone. On most policies it's being held back until you do the work — and a great deal of it never gets claimed, because nobody explains that it's there.
We're Insurance Claims Consultants. This page explains what depreciation is, when you get it back, and how it goes missing.
Call (864) 497-2151. First conversation is free.
What Depreciation Actually Is
Insurance settlements start from replacement cost — what it would take to replace the damaged item today, at today's prices.
Then the carrier subtracts depreciation: an amount reflecting the item's age, wear and remaining useful life. A ten-year-old roof with a twenty-year expected life has used half its life, so roughly half its value comes off.
What's left is actual cash value — replacement cost minus depreciation. That's the first cheque.
Whether you ever see the rest depends on one thing: which kind of policy you have.
Recoverable or Non-Recoverable
On a replacement cost policy, the depreciation is recoverable. The carrier pays actual cash value first, you complete the repair, you send evidence, and they release the held-back amount. You end up with the full replacement cost.
On an actual cash value policy, it isn't. The depreciated figure is the settlement, and there's nothing further to claim.
Which one you have is written on your declarations page, usually as "RCV" or "ACV" against each coverage. It's worth checking now rather than after a loss, because the difference on a roof or a contents claim can be very large.
A common trap: a policy can be replacement cost on the building and actual cash value on contents, or actual cash value on the roof specifically. Mixed policies are ordinary rather than unusual.
How to Get It Released
Where depreciation is recoverable, the process is mechanical — but each step has to be completed.
- Complete the repair or replacement. Most policies require the work to be done, not merely quoted for.
- Keep everything. Contractor invoices, receipts for materials, proof of payment, before-and-after photographs.
- Submit a supplemental claim for the held-back amount, referencing the original claim number.
- Watch the deadline. Policies impose a time limit for completing work and claiming the balance — often 180 days or a year from the loss, sometimes less. Miss it and the money is forfeited.
- Follow up. Supplemental payments are not always issued automatically once documentation is in.
Where the actual repair cost exceeded the original estimate — which is common — that difference is claimable too, not just the depreciation withheld.
Where It Goes Wrong
- Nobody explained it. The settlement letter mentions depreciation without making clear that it can be reclaimed, and the homeowner assumes the first cheque was the whole claim. This is by far the most common failure.
- Excessive depreciation applied. Depreciation should reflect actual condition and remaining useful life, not a schedule applied mechanically to paper age. A well-maintained roof at fifteen years is not the same as a neglected one.
- Depreciation applied to labour. Contested and jurisdiction-dependent. Materials wear out; the labour to install them does not, and depreciating it is arguable.
- The deadline passed while the homeowner waited for contractors or funds.
- The work was done but never documented, so there's nothing to submit.
- Partial repairs. Where only some of the work is completed, only the corresponding depreciation is released — and the rest can lapse.
How It Looks on a Settlement
A typical settlement breakdown reads something like this:
- Replacement cost value — what the repair costs today
- Less depreciation — deducted for age and wear
- Actual cash value — the first payment
- Less deductible
- Net claim payment — the cheque that arrives
The depreciation line is the one to look for. On a replacement cost policy that figure is owed to you once the work is done.
If your settlement paperwork doesn't break the figures out this way, ask for one that does. You're entitled to see how the number was reached.
How We Help
When you hire us, we take the claim off your hands. We check whether depreciation was applied correctly rather than mechanically, make sure the supplemental claim is filed within the deadline, and claim the difference where actual costs exceeded the estimate.
Recoverable depreciation is the most commonly abandoned money in property insurance, and it's abandoned by people who simply weren't told it was theirs.
No hourly billing. No upfront cost.
Our fee is a percentage of what you recover.
We work for you, not for the insurance company.
Anywhere in North Carolina, South Carolina or Georgia, call (864) 497-2151. Bring your settlement paperwork.
