Filing an insurance claim feels overwhelming, especially when terms like actual cash value and recoverable depreciation show up in your paperwork. If your property suffers damage, understanding how depreciation works helps you get the money you’re owed. Below, you’ll find what these terms mean and how to recover depreciation without leaving money on the table.
What is Recoverable Depreciation?
Recoverable depreciation is the difference between the replacement cost value of your damaged property and its actual cash value at the time of loss. Most items lose value over time because of age or wear and tear. If your homeowners insurance includes replacement cost coverage, you can recover that lost value once you repair or replace the damaged item.
What is Non-Recoverable Depreciation?
Non-recoverable depreciation means you cannot claim the difference between what something costs new and what your insurance company paid based on its current condition. This happens if your policy pays only actual cash value or if the item is too old to qualify. Once the diminished value claim is paid, you don’t get anything more, even if repairs cost more.
How Does Recoverable Depreciation Affect an Insurance Claim?
Recoverable depreciation can significantly change the amount you collect from an insurance claim. Imagine your roof suffers damage, and replacing it costs $25,000. The insurance company pays the actual cash value upfront—let’s say $15,000—after factoring in depreciation. If your policy has a recoverable depreciation clause, you’ll receive the remaining $10,000 once the work is done. Without filing for recoverable depreciation, you risk leaving that money behind.
Steps to Recover Depreciation On Your Insurance Claim
Recovering depreciation takes time, but following the right steps gets you paid what you’re owed:
1. Review Your Policy Details
Start by reading your homeowners insurance policy to confirm if you have replacement cost coverage. Look closely at the recoverable depreciation clause and any deadlines. Some policies require you to complete repairs within a set timeframe, so don’t miss that window.
2. Understand Your Initial Payout
When you file your insurance claim, the insurance carrier pays the actual cash value of the damaged item. This initial payment reflects the replacement cost minus depreciation based on age and condition. Many people mistake this first check as the final payout—but there’s more to collect if your policy includes recoverable depreciation.
3. Complete the Repairs or Replacement
Recovering depreciation means you must repair or replace the damaged property. If you’re fixing your roof, flooring, or personal property, make sure the work matches the cost estimate. Cutting corners could reduce your final payout. The insurance company will only reimburse costs that meet the policy’s replacement cost value.
4. Keep Detailed Records and Receipts
Save every receipt, invoice, and contract. You’ll need proof you spent the money to restore or replace the damage. Take photos before, during, and after repairs. This documentation supports your claim recoverable depreciation and makes it harder for the insurance company to push back.
5. Submit Your Depreciation Claim Promptly
Once repairs are done, file your request to recover depreciation. Attach your receipts and proof of repairs. Some policies require you to file within 180 days or less, so don’t delay. Submitting late can lead to losing your right to the recoverable depreciation amount.
6. Follow Up with the Insurance Carrier
After submitting everything, stay in touch with your insurance carrier. Ask for updates, confirm they received your paperwork, and provide anything else they request. Staying on top of your file helps prevent unnecessary delays.
If the numbers don’t add up or your claim stalls, or if you just need help filing your claim, consider hiring a licensed public adjuster. Our team at Excel Adjusters advocates on your behalf to get you the fair and reasonable settlement you deserve, especially if you’re dealing with a complex situation like a diminished value claim or large property loss.
Get Help with Your Insurance Claim From Excel Adjusters
Recovering depreciation can feel complicated, especially when terms like actual cash, replacement cost, and insurance depreciation come into play. At Excel Adjusters, we help property owners handle every step of the claims process. No matter the extent of damage, we review your policy, speak directly with the insurance company, and fight to get you the fair and reasonable settlement amount you’re owed.
